The tax gap estimate was 5.3% for the 2023/24 tax year, according to the latest data from HMRC.

The tax gap is the difference between what tax is expected to be paid and actually paid.

HMRC collected £829.2 billion in the 2023/24 tax year representing 94.7% of all tax due, leaving £46.8 billion unpaid.

However, HMRC revised the figures upwards for 2022/23, from 4.8% (£39.8 billion) to 5.6% (£46.4 billion). It also warned that the latest figures may be revised as more data becomes available.

Some of the key findings from this year’s calculations show:

• Small businesses represent the largest proportion of the tax gap (60%).
• Corporation Tax accounts for 40% of the total tax gap.
• Failure to take reasonable care (31%), error (15%) and evasion (14%) are among the main behavioural reasons for the overall tax gap.

Ellen Milner, Director of Public Policy, said:

‘These figures show the stubbornness of the tax gap and how optimistic the government’s target of a £7.5 billion reduction by 2029/30 is.

‘While large businesses and wealthy individuals are often accused of not paying enough tax these figures suggest that their total share of the tax gap is not much more than a quarter of that of small businesses.

‘The small business figures reflect big upward revisions from HMRC a year ago as a result of a random enquiry programme carried out in 2020/21, which identified greater inaccuracy and non-compliance than previously forecast.’

Internet link: HMRC press release CIOT

The UK government is aiming to slash energy prices, unlock investment and upskill the workforce in its Industrial Strategy.

The government says the Industrial Strategy was developed in partnership with business and includes targeted support for the areas of the country and economy that have the greatest potential to grow.

It says it will slash electricity costs by up to 25% from 2027 for electricity-intensive manufacturers in growth sectors and foundational industries in their supply chain.

The government says it will unlock billions in finance for innovative business, especially for SMEs by increasing British Business Bank financial capacity to £25.6 billion.

Finally, it has pledged to upskill the nation with an extra £1.2 billion each year for skills by 2028/29.

Alex Veitch, Director of Policy at the British Chambers of Commerce (BCC), said:

‘Attracting and retaining people with the right skills is crucial for business, and a fundamental part of driving economic growth.

‘We are pleased the government has listened to our calls and put skills at the heart of the Industrial Strategy. The extra cash investment for training in key sectors, such as defence and engineering, has the potential to be a real springboard for growth.

‘Further action is needed on skills, including more flexibility in the Growth and Skills Levy and a commitment to Local Skills Improvement Plans across England, many of which are successfully led by Chambers.

‘This week’s Industrial Strategy must provide an ambitious long-term plan to drive forward investment and growth through businesses across the UK.’

Internet link: GOV.UK  BCC

The Financial Conduct Authority (FCA) joined forces with eight international regulators for a week of action to combat the risks of finfluencers on social media.

Finfluencers are widespread throughout social media platforms. They promote themselves as successful entrepreneurs in luxurious destinations to lure people into paying for their services such as masterclasses to get rich quick and following their investment strategies.

Regulators from the UK, Australia, Canada, Hong Kong, Italy and the United Arab Emirates (UAE) took part in a ‘global week of action against unlawful finfluencers’ from 2 June.

In the UK, the FCA:

• made three arrests with the support of the City of London Police
• authorised criminal proceedings against three individuals
• invited four finfluencers for interview
• sent seven cease and desist letters
• issued 50 warning alerts.

The FCA says the warning alerts will result in over 650 take down requests on social media platforms and more than 50 websites operated by unauthorised finfluencers.

Steve Smart, Joint Executive Director of Enforcement and Market Oversight at the FCA, said:

‘Our message to finfluencers is loud and clear. They must act responsibly and only promote financial products where they are authorised to do so – or face the consequences.’

Internet link: FCA

Taxpayers are being urged to check their online HMRC account after scammers attempted to defraud the tax authority using individuals’ data and login details.

The Low Incomes Tax Reform Group (LITRG) is also reminding people of the importance of being vigilant and taking care of personal data.

HMRC recently announced that criminals had targeted the online tax accounts of nearly 100,000 taxpayers to try to make false tax refund claims.

In some cases, HMRC have said that criminals gained people’s login credentials and made use of existing online tax accounts. But, in others, they gained personal data that enabled them to set up new online tax accounts via the Government Gateway.

HMRC have locked down the compromised accounts as a precaution. They are writing to those affected with details on how they can regain access to their accounts. 

Joanne Walker, Technical Officer at LITRG, said:

‘HMRC have confirmed that they were the victim of online scammers who tried to defraud them of money using the details of individual taxpayers.

‘While HMRC say this attack has not resulted in any tax-related financial loss for individual taxpayers, it is a timely reminder that fraud is an ongoing threat.’

Internet link: LITRG

HMRC will reduce late payment and repayment interest rates from 28 May following the 0.25% cut in the base rate earlier in the month.

The Bank of England cut the base rate to 4.25% on 8 May, triggering a 0.25% cut in HMRC interest rates which are pegged to the base rate.

From 28 May, the late payment interest rate will be cut to 8.25% from 8.5%, which was the highest rate charged since February 2000.

The repayment interest rate will be cut to 3.25% from 3.5% from 28 May.

HMRC late payment interest is set at base rate plus 4%. Repayment interest is set at base rate minus 1%, with a lower limit – or ‘minimum floor’ – of 0.5%.

Following the cut to the base rate David Bharier, Head of Research at the British Chambers of Commerce said:

‘Many firms, desperate for financial respite, will be keen to see further rate cuts in the months ahead.

‘National insurance hikes, alongside other cost pressures, are already having an impact, including increased prices, hiring freezes, and reduced investment.

‘The next few months are likely to remain volatile and the full impacts of a global trade war are still uncertain. Businesses will be looking to government to provide stability and avoid any further pain.’

Internet link: GOV.UK BCC