Tax gap three times what HMRC says

Updated: 

Tax return formsPA

Britain's tax gap has been massively underestimated by HMRC, according to the union that represents staff working at the service. Civil service union PCS reckons the real figure is around £120bn, which is three times what HMRC estimates.

The union says its research into the amount of money lost through tax evasion, avoidance and the non-collection of taxes casts "serious doubts on HMRC's methodology". It also says the department has refused to share details of the methods it used to make its estimates.

PCS general secretary Mark Serwotka said: "By any measure, £35 billion is a lot of money and it ought to be chased. But we estimate the real figure is more than three times that, and cuts in HMRC are leaving the department unable to cope."

Job cuts

The union is concerned about the effects of the government's spending cuts which it says will slash £2.1bn from HMRC's budget and result in the loss of 10,000 jobs by 2015. This follows the 30,000 jobs that have already been lost since HMRC was created in 2005.

These reductions are in spite of the measures trumpeted by Treasury Chief Secretary Danny Alexander at this week's Liberal Democrat party conference. Alexander said 2,250 staff would move into new anti-evasion and avoidance jobs, and that £900m would be invested in the service.

Alexander's speech came just after the closure of the Wick tax office in the Scottish constituency of Caithness, Sutherland and Ross. Alexander's seat is also in the Highlands.

Vodafone

The news also follows the admission by HMRC boss Dave Hartnett that taxpayers are out of pocket because of "errors" made in concluding tax deals in two high-profile cases – believed to be Vodafone and Goldman Sachs. My colleague Adrian Holliday writes about this elsewhere on the site today.

Serwotka concluded: "Instead of cutting jobs and offices, ministers should invest to rigorously pursue the tens of billions of pounds in tax lost through the use of tax havens and evasion and avoidance tactics by big corporations and the very wealthy."

On the evidence we've seen so far this year, you have to cause to be afraid, very afraid, if you fill in your tax return incorrectly or work as a plumber. But if you're a multibillion-pound global corporation, you can probably get away with not paying what you should.

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