Twentieth Report - Tackling the tax gap
Select Committee
Public Accounts Committee
HC 650
16 October 2020
Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Twentieth report from Session 2019-21 · published 4 Feb 2021
Recommendations & Conclusions
5 results
20
Recommendation
Rejected
In addition, HMRC does not publish any tax gap analysis for different types of industry.
Recommendation
In addition, HMRC does not publish any tax gap analysis for different types of industry. For example, HMRC has not published an estimated tax gap for the construction industry despite introducing the construction industry scheme to deal with high levels …
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Government Response Summary
The government rejects the recommendation to include tax gap analysis by industrial sector due to data and modelling limitations, feasibility issues, and the high level of assumption required, and implicitly rejects analysis for the four nations for similar reasons.
HM Treasury
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7
Conclusion
Rejected
HMRC measures the additional amount it generates by tackling tax avoidance, evasion and non-compliance, known...
Conclusion
HMRC measures the additional amount it generates by tackling tax avoidance, evasion and non-compliance, known as compliance yield. In its 2018–19 Annual Report, HMRC reported £34.1 billion of compliance yield, compared with £30.3 billion in the previous year.12 HMRC confirmed …
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Government Response Summary
The government rejects the implicit suggestion of providing confidence intervals for compliance yield, explaining that due to complexity and varied methodologies, a robust method would be complex, assumption-based, and of limited insight.
HM Treasury
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8
Conclusion
Rejected
HMRC publishes a breakdown of the tax gap by taxpayer group, tax type and behaviour.16...
Conclusion
HMRC publishes a breakdown of the tax gap by taxpayer group, tax type and behaviour.16 HMRC told us that it uses the outcomes of its tax gap analysis as indicators 7 Q 23; C&AG’s Report, para 1.12 8 Qq 23–25 …
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Government Response Summary
The government rejects the implicit recommendation for tax gap analysis in the four nations due to data and modelling limitations, stating that current methods do not comprehensively allow for such subgroup analysis, though it disaggregates the oils tax gap for Northern Ireland where feasible.
HM Treasury
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9
Conclusion
Rejected
It also transpired, when we questioned the Department about the size of the tax gap...
Conclusion
It also transpired, when we questioned the Department about the size of the tax gap in the construction industry, that HMRC does not assess and publish the relative size of the tax gap across different industries. The construction industry has …
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Government Response Summary
The government disagrees with the implied recommendation to assess and publish the tax gap across different industries, explaining that current models, data, and resources do not allow for comprehensive or precise industry-specific analysis.
HM Treasury
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11
Conclusion
Rejected
HMRC’s tax gap does not capture the ‘policy gap’, which HMRC characterised as the tax...
Conclusion
HMRC’s tax gap does not capture the ‘policy gap’, which HMRC characterised as the tax loss that is not due, but which might be due if the tax rules could be tightened up. HMRC confirmed to us that there is …
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Government Response Summary
The government rejects the idea of measuring tax loss from 'undesirable sophisticated tax planning' due to definitional and feasibility issues, though it states it already estimates the avoidance tax gap (bending rules, not the spirit of the law).
HM Treasury
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