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Uncollected Tax

Volume 587: debated on Tuesday 4 November 2014

4. What estimate Her Majesty’s Revenue and Customs has made of the amount of uncollected tax in the last year for which figures are available. (905841)

HMRC published its latest tax gap estimates on 16 October, and in 2012-13 the gap was estimated at £34 billion—6.8% of total tax due.

Thirty-four billion pounds is a very significant amount of money, and under this Government the amount of uncollected tax has risen by £3 billion. Why has the Minister allowed that to happen?

Let us be clear: a rate of 6.8% is lower than was achieved in any year under the last Labour Government. In addition, HMRC’s yield—the money that has come in as a consequence of its efforts—was £7 billion higher in 2013-14 than it was in 2010-11. The fact is that this Government have an excellent record on dealing with tax avoidance, tax evasion and the tax gap.

Can the Chancellor of the Exchequer say how the Government are encouraging greater payment of tax through international agreements that we have achieved, for example, with Switzerland?

I am sure that the Chancellor can explain that, but as I am already at the Dispatch Box, I will answer the question. The UK has very much led the way in the OECD base erosion and profit shifting process, ensuring that the international tax system is fit for purpose. We have made good progress on that, but there is still work to do.

18. Does the Minister think that there is any link between the deep cuts to HMRC staff, particularly in Cardiff, and the uncollected tax that is rising under this Government? (905859)

As I say, what has happened under this Government is that the yield brought in by HMRC has increased year after year. The tax gap is lower for 2012-13 than it was in any year under the previous Labour Government. In truth, the record of HMRC is one of getting more from less, but we have invested in the areas that bring in money on tax avoidance and tax evasion.

Will the Minister ensure that the unacceptable and unwelcome £1.7 billion bill from the European Union remains an uncollected tax demand, and that there will be no payment of interest on any late payment?

First, I congratulate my hon. Friend on the ingenuity of his question. Secondly, let me repeat what the Prime Minister said: we will not be paying £1.7 billion on 1 December.

It was indeed an extremely ingenious question, as HMRC would not be the tax collector, but, understandably, that did not trouble the hon. Member for Kettering (Mr Hollobone) in any way.

20. One in four children across the UK lives in poverty while this Government allow £34 billion in unpaid tax to go astray. Does the Minister not see an urgency in collecting that tax so that he can eliminate that disgraceful statistic? (905862)

Let us be clear: the tax gap is lower than it was under the previous Government and yield is higher. By international standards, the UK has one of the lowest tax gaps in the world. We have a good record, but we always seek to do more, which is why at the Budget and autumn statement we have always been able to bring forward measures to deal with tax avoidance and tax evasion, and that is a record with which we will continue.

The Minister has failed to acknowledge that families struggling to make ends meet expect the Government to ensure that everyone pays their fair share, and yet the amount of uncollected tax has risen by £3 billion since he came to office. Is it not the truth that that is both deeply unfair to hard-working families and further evidence that this Government have totally failed to tackle tax avoidance?

No; we have brought forward 40 measures to reduce tax avoidance, reduced the tax gap as a proportion of tax receipts, and increased by £7 billion the yield brought in by HMRC. The truth is that it is this Government who have acted in this area, and the record of the previous Government does not bear comparison.