Tax Gap: How cracking down on illicit trade could fund a 1p cut in the basic rate of Income Tax

November 14, 2016 12:01 AM

Every year Her Majesty’s Revenue and Customs (HMRC) estimates how much tax revenue is lost to the black market. The annual report, Measuring Tax Gaps, is an annual report looking at a range of ways in which HMRC loses out on revenue from a range of direct and indirect taxes.

The tax gap is largest when it comes to duties on tobacco, alcohol and diesel – the most highly taxed products. The report provides figures for the amount lost in previous financial years. However, there is a tendency for the figures for a specific financial year to be revised in later reports, sometimes by large amounts. Historically, these revisions have been upwards meaning that the tax gap on the above products could be significantly higher.

Click here to read the full research note.

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