“HMRC loses £16bn ($24bn, €22bn) a year due to tax fraud, but reducing these losses is not straightforward,” said Amyas Morse, head of the National Audit Office (NOA), which compiled the report.
“HMRC has met its targets to raise more tax revenue in the short-term. It now needs to consider whether its overall strategy is designed to achieve the best long-term outcomes.”
HMRC currently estimates that the UK has a total tax gap of £34bn – of which half is related to fraud and criminal activity. The remainder, which falls outside the scope of the NOA report, relates to genuine error, non-payment, and avoidance.
“HMRC loses £16bn a year due to tax fraud, but reducing these losses is not straightforward."
The NOA report, the first in a series, follows chancellor George Osborne’s Autumn Statement announcement that the government plans to raise an additional £5bn a year through tackling avoidance, evasion, non-compliance, and imbalances in the tax system.
Osborne further announced that HMRC will receive £800m to fund additional work to tackle evasion and non-compliance by 2020-21.