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Taxation: Fraud

Volume 506: debated on Monday 22 February 2010

To ask the Chancellor of the Exchequer what estimate he has made of the cost to the Exchequer arising from organised fraud in relation to (a) income tax, (b) value added tax, (c) corporation tax, (d) national insurance, (e) tax credits and (f) child benefit in each of the last five years. (317297)

In “Protecting Tax Revenues 2009”, published at 2009 pre-Budget report, HMRC estimated that criminal attacks accounted for 12.5 per cent. of the total net tax gap of £40 billion in 2007-08:

http://www.hmrc.gov.uk/pbr2009/protect-tax-revenue-5450.pdf

Reliable estimates for losses arising from organised fraud in income tax, corporation tax national insurance and child benefit are not available.

Estimates for value added tax losses arising from organised fraud (Missing Trader Intra-Community fraud) for the years 2005-06 to 2008-09 are available in “Measuring Tax Gaps 2009”:

http://www.hmrc.gov.uk/stats/measuring-tax-gaps.pdf

HM Revenue and Customs 2008-09 Accounts reported that for tax credits £31.9 million was written off due to organised fraud in 2008-09:

http://www.hmrc.gov.uk/about/hmrc-accs-0809.pdf