According to a data shows that HMRC collected record 93.5% of expected revenues.
The gap between what UK tax authorities expected and what they collected was its smallest ever last year.
HM Revenue & Customs said that in 2014-15, it collected 93.5 per cent of the theoretical maximum tax owed, 0.4 percentage points more than the year before. Businesses and individuals paid £36bn less tax than they should have done in 2014-15, down from £37bn a year earlier, according to data published on Thursday.
One main reason for the shrinking "tax gap" — which measures the impact of avoidance, evasion and other losses on revenues — was reform to the way employers reported payroll taxes.
From 2013, most employers were obliged to provide "real-time information" to HMRC and report employee pay on or before every payday, rather than at the end of the year.
It was the biggest reform to the Pay As You Earn system since its introduction more than 60 years ago. HMRC said that the proportion of small and medium-sized employers failing to correctly operate PAYE schemes dropped from 41 per cent in 2005-06 to 24 per cent in 2014-15 and the gap for PAYE tax fell from £4bn to £2.8bn in the year to 2014-15
HMRC said the shift to reporting VAT online had helped bring the VAT gap in 2014-15 down to its lowest level of 10.3 per cent.
The tax gap for self assessment was £7bn, or 19 per cent of theoretical tax liabilities. Business self assessment taxpayers were responsible for £5bn of this £7bn. The proportion of self assessment taxpayers who underpaid tax fell from 29 per cent in 2005-06 to 22 per cent in 2012-13.
While the tax gap had fallen from 8.3 per cent in 2005-06 to 6.5 per cent by 2014-15, it had levelled off in recent years, HMRC said. The £37bn gap reported for 2013-14 was an upward revision of £2.8bn because the data suggested more non-compliance, particularly among self assessment taxpayers.
The gap between the amount expected and what was collected shrank most for corporation tax and excise tax.
HMRC said that in 2014-15, when it collected revenues of almost £518bn, it secured a record amount of £27bn from a crackdown on avoidance, evasion and mistakes. It said that since 2010 the government had invested an additional £1.8bn to tackle evasion, avoidance and non-compliance. This included action against organised crime gangs behind illicit trade in tobacco and alcohol, a bigger budget to tackle fraud and errors, and investing £1.3bn in digital transformation.
It is consulting on requirements for businesses to report financial information quarterly online, rather than once a year, and expects to collect large amounts of extra tax from more regular, accurate information from small businesses.
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