Tax cheats robbing UK of £32 billion annually

The UK looses £32 billion annually to tax cheats who found ways of avoiding taxes,  revenue chiefs said yesterday.

The £32-billion 'tax gap' the shortfall in the amount tax authorities should receive stands at a quarter of the country's deficit, which was £119 billion last year.

According to HM Revenue and Customs, the 'tax gap' has been at least £30 billion in each and every one of the last seven years.

The revelation comes as corporate giants have come in for flak for their tax affairs after it emerged this week that Starbucks had paid corporation tax of just £8.6 million in its 14 years trading in Britain.

The total tax revenue of the UK in 2010-11 stood at £467 billion, but the collection should have been £32 billion more, according to the report published yesterday by HMRC.

This 'tax gap' was around £1 billion higher than it was in the previous year, it admitted. The gap covers all types of taxes from income tax to VAT, corporation tax to stamp duty on shares and homes, to tobacco duty.
 
According to John O'Connell, research director of the TaxPayers' Alliance, the yawning tax gap meant that hard-pressed families faced higher taxes to make up the shortfall. He said to close the gap, the government needed to implement wholesale tax reform to ensure the system was fair and transparent.