Source · Select Committees · Public Accounts Committee
Recommendation 7
7
HMRC's tax gap estimates remain uncertain and not broken down by industrial sector.
Conclusion
HMRC told us that the tax gap measure is its best estimate with the data available to it. It acknowledged that its estimates for behaviours, including evasion, are uncertain.10 HMRC explained that it revises its estimates in subsequent years, for example when data from external sources is updated or it settles inquiries with taxpayers.11 In 2020, the previous Public Accounts Committee recommended that HMRC analyse the tax gaps for each industrial sector.12 HMRC disagreed, saying that it did not collect data which would allow it to produce reliable estimates and to do so would increase the burden on taxpayers.13 HMRC maintained this position when we asked why it continues to not monitor the tax gap by sector.14 6 C&AG’s Report, para 3 7 C&AG’s Report, para 2 8 Measuring tax gaps 2024 edition: tax gap estimates for 2022 to 2023 – GOV.UK 9 C&AG’s Report, para 1.4 10 Q 13 11 Q 14 12 Committee of Public Accounts, Tackling the tax gap, Twentieth Report of Session 2019– 2021, HC 650, October 2020 13 HM Treasury, Government responses to the Committee of Public Accounts on the Eighteenth and the Twentieth to the Twenty–Fourth reports from Session 2019–2021, Treasury Minutes, CP 363, January 2021 14 Q 27 9