Recommendation 19

HMRC estimates that the tax gap–the difference between the amount of tax that should be paid to HMRC, and what was actually paid–increased from £38.1 billion in 2021–22 to £39.8 billion in 2022–23 (the latest year for which HMRC has made an estimate). As a proportion of tax due, it decreased from 5.2% to 4.8%.56 HMRC has been given additional resources to bring in more tax revenue and reduce the tax gap further. In the Autumn Budget 2024 it was given funding for 5,000 additional compliance officers and it expects the measures set out will bring in approximately £6.5 billion additional tax revenues by 2029–30.57 It said additional staff will focus on tackling non- compliance among small businesses, who made up 60% of the tax gap in 2022–23, up from 37% in 2017–18.58 HMRC said these staff will initially be used to respond and investigate where taxpayers make mistakes or avoid or evade tax, although HMRC said tackling non-compliance among small businesses in this way is challenging given the large number of cases.59