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Source · National Audit Office

Tackling the tax gap

This report examines the effectiveness of HMRC’s approach, in partnership with HM Treasury, in reducing the tax gap.

Published: 22 Jul 2020 Recommendations: 5 Type: Value for Money NAO confirmed: 5 Department: HM Revenue and Customs
Dept: HM Revenue and CustomsHM Treasury Topics: Money and taxTax and revenue nao.org.uk →

Recommendations

5 items
5 accepted 5 implemented

Recommendation 1

Addressee: HM Revenue and Customs · Source location: Page 12, paragraph 26, point a

To improve its approach to tackling the tax gap, HMRC should:
a) seek opportunities to base more of the overall tax gap estimate on established methodologies to reduce the level of uncertainty;

Response position: Accepted

Delivery: Implemented · 09/2021 · Confirmed by NAO

Recommendation 2

Addressee: HM Revenue and Customs · Source location: Page 12, paragraph 26, point b, part i

b) in developing its new performance measures:
i) develop measures for each significant factor affecting the tax gap, for example, costs to taxpayers and intermediaries of complying, taxpayer experience, perceptions of fairness and the deterrence effect of its activities;

Response position: Accepted

Delivery: Implemented · 03/2022 · Confirmed by NAO

Recommendation 3

Addressee: HM Revenue and Customs · Source location: Page 12, paragraph 26, point b, part ii

ii) review the impact of compliance yield on the tax gap, and the significance of timing differences between the compliance yield and the tax gap measures;

Response position: Accepted

Delivery: Implemented · 12/2021 · Confirmed by NAO

Recommendation 4

Addressee: HM Revenue and Customs · Source location: Page 13, paragraph 26, point b, part iii

iii) in partnership with HM Treasury develop shared and trusted data on the impact of different resourcing options, including the marginal rates of return from compliance activity and wider trade-offs, to help judge how to maximise tax revenues cost-effectively; and

Response position: Accepted

Delivery: Implemented · 03/2022 · Confirmed by NAO

Recommendation 5

Addressee: HM Revenue and Customs · Source location: Page 13, paragraph 26, point c

c) while recognising that it is appropriate for HMRC to primarily organise its approach to compliance by risk and customer group, consider extending, where relevant to other tax gap behaviours, good practice shown in its tax avoidance strategy and approach. For example, by setting out, in a single place for other behaviours, clear strategic objectives for tackling the underlying behaviour and a summary of the different actions HMRC is taking to achieve those objectives.

Response position: Accepted

Delivery: Implemented · 12/2021 · Confirmed by NAO

Public Accounts Committee follow-up

1 report

The Public Accounts Committee examined this NAO report and published its own recommendations. The government responds to PAC recommendations via Treasury Minutes.