HMRC is missing £40 billion

HMRC is missing at least £40 billion in unpaid tax.

This figure – known as the ‘tax gap’ – was released by HMRC last week.

The tax gap is the difference between the amount of tax owed and what the government collects.

Missing this amount of tax is simply unacceptable at a time when the health service and public services are ‘on the brink of collapse’ from underfunding.

Unpaid tax is growing

The tax gap has increased in real terms to £40 billion from £36 billion in 2021-22.

That’s an eye watering sum of money. It’s also an under-estimate as it doesn’t include money that wealthy companies shift offshore, as our friends at TaxWatch point out.

To put £40 billion in context, it’s enough to cover government spending on the police, or nearly half the money spent on schools.

“It is not just or right for billions of pounds of tax to be left uncollected,” my colleague Rachael said, as was reported by CityAM and the i newspaper.

Why we’re missing £40 billion

HMRC is under-resourced for the job at hand. They don’t have the staff to properly investigate and chase tax dodgers – or follow up on taxpayer mistakes.

This isn’t our view, but that of the Parliament’s Public Accounts Committee.

MPs slammed the government last year for underfunding HMRC – and insisted that more money must be invested into tax investigations.

If we closed the tax gap

With more resources and investment, HMRC could have the teeth to claw back more unpaid tax – and close the tax gap.

If the tax gap were to be closed by just 10%, this could cover the cost of ending the two child benefit cap.

Closing the tax gap by 20% could pay for around 60,000 nurses, 40,000 teachers, and 40,000 police officers.

The collection of unpaid tax could be transformative for public services and the social security net in the UK.

It’s encouraging that all the major parties, including Labour, the Conservatives and Lib Dems, are promising to invest more in HMRC to narrow the tax gap after the election.

A global billionaires tax?

I want to share some exciting news with you: global support for taxing billionaires is growing.

A report released this week is calling for a coordinated global minimum tax for billionaires.

The work by leading tax economist Gabriel Zucman proposes a new global tax on billionaires and details how it could work. It was commissioned by the Brazilian presidency of the G20, a grouping of the world’s major economies.

Zucman found a pattern – that billionaires pay lower effective tax rates than everyone else.

This deprives governments of significant amounts of tax revenue and contributes to the concentration of wealth in the hands of a small minority.

Zucman recommends a 2% minimum tax on the wealth of billionaires, in-line with our own proposals for UK-based billionaires.

Supportive statements were made by government Ministers in Brazil, France, Spain, South Africa, Belgium, and Colombia when the idea for a global minimum wealth tax was first announced.

I’ll be keeping my eye on developments and will update you as things progress.

Help us reform our tax system

For three weeks we’ve been asking for your financial support to help us influence the new government.

Your response has been incredible. We’ve now raised over £24,000 from over 730 people. Thank you if you have made a donation.

If you would like to help us reach our goal, please make a donation here: