Source · Select Committees · Public Accounts Committee
Recommendation 21
21
Acknowledged
HMRC's tax gap estimations, particularly for offshore and foreign income, remain uncertain.
Recommendation
HMRC said that its calculation of the tax gap uses estimation and judgement, and that some parts of it are more certain than others.62 It said in October 2024 it published experimental statistics on the proportion of the tax gap that comes from foreign income. In monetary terms, HMRC 55 Q 36 56 Report on 2023–24 Accounts, para 5 57 Q 15 58 Q 19; Report on 2023–24 Accounts, para 5 59 Qq 16, 19, 33 60 Qq 21-22 61 Q 29 62 Q 20 14 estimated this at £0.3 billion. HMRC said this represents only one aspect of the offshore tax gap and is uncertain, and that the data published in 2024 relates to undeclared or under-declared tax in the year 2018–19.63
Government Response Summary
HMRC will assess the feasibility of extending the published estimate of the tax gap arising from undisclosed foreign income, including engaging with academics and scaling up compliance activity.
Government Response
Acknowledged
HM Government
Acknowledged
The government agrees with the Committee’s recommendation. Target implementation date: June 2026 6.4 HMRC will assess the feasibility of extending the published estimate of the tax gap arising from undisclosed foreign income, including engaging with academics. HMRC is determined to address offshore tax non-compliance, as part of the government’s efforts to close the tax gap. HMRC has had a published strategy for ensuring offshore tax compliance since 2019. The government set out its approach at Autumn Budget 2024 and announced significant additional resources, including the scaling up of compliance activity to tackle serious offshore non-compliance, including fraud by wealthy customers, corporates they control and other connected entities. As a result of this investment, HMRC will increase its capacity and capability to tackle the most challenging examples of serious non-compliance.