The tax gap of £22 billion
The continuing arguments over non-doms and their tax status is just one angle on the question of whether public funds are receiving all that they should in tax revenues.
Another issue is the size of the 'tax gap' - the gap between taxes that should be paid if everyone complied with the letter and spirit of the law, and those that actually are. This gap includes avoidance, evasion and error (although not necessarily the sort of tax planning that many non-doms are involved in).
For obvious reasons the size of the tax gap is difficult to assess. But the more it is understood, the easier it should be to tackle. In the past the government has published estimates of the gap for indirect taxation. Now freedom of information has forced it to publish research which attempted the harder task of investigating the direct tax gap.
Compiled in 2005, this report estimated the annual direct tax gap at £22 billion, 9 per cent of tax and NI receipts. It added that it could range as high as £41 billion, nearly twice as much.
The research was published on Budget Day and has been little noticed amongst the mass of budget documentation. It was accompanied by a more up-to-date statement drawing attention to the methodological uncertainties involved, and by a report on the government's strategy for protecting tax revenues.
One reason why the Information Commissioner dismissed HMRC's initial refusal to release the document was the argument that 'it is fully open to HMRC to publish the information with whatever explanations – or further information - it chooses to provide full context about its status, timing and untested nature'.
Although it was released in response to an FOI request, following the Commissioner's decision, HMRC has strangely published the report not on its disclosure log, but within the 'practitioner zone' of its website.
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