After recent HMRC figures found that small businesses represent the largest group of the tax gap, the government is being urged to provide better tax support for SMEs.
UK Tax Gap
HMRC’s findings show that the estimated tax gap for 2024/2025 is 6.4%, equating to £59.2 billion in uncollected tax.
According to the latest data, small businesses make up the majority (62%) of the tax gap.
Other key findings show:
- Corporation Tax accounts for 35% of the total tax gap.
- Around half of the SME tax gap is for Corporation Tax.
- The largest behavioural risks to the tax gap are failure to take reasonable care due to carelessness or negligence (35%), errors (16%) and evasion (12%).
More Frontline Support Needed for SMEs
The Association of Taxation Technicians (ATT) believe that greater support is needed for small businesses, to help them to get their tax right.
Emma Rawson, ATT’s Director of Public Policy, explained, “The latest figures underline the importance of tackling non-compliance, but they also show that enforcement alone will not close the tax gap.
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“Small businesses account for the largest share of the tax gap, but many business owners are trying to comply with an increasingly complex tax system while managing the day-to-day demands of running a business.
“HMRC is already collecting more than 93% of the tax that is due. The challenge now is increasingly concentrated among smaller businesses, which means targeted support and intervention will be essential if the tax gap is to be reduced further.
“The fact that so much of the tax gap stems from error and failures to take reasonable care suggests there is significant scope to improve compliance through better support, clearer guidance and simpler processes.”
For more information, please contact Jaime on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com.
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