ARC welcomes tax gap reduction but warns against complacency while further HMRC resource is still needed

28 October 2015
(For immediate release)

Responding to reports that the tax gap - the difference between the amount of tax due to the Exchequer and the amount actually collected in any given year - now stands at 6.4% of tax due for 2013-14, having fallen from 6.6% in each of the previous two years, ARC President Tony Wallace said:

"The tax gap reduction is great news and reflects the hard work of ARC's members who are senior professionals and leaders across HMRC.

"When compared to the 2005-06 figure of 8.4%, it represents an additional £57bn in cumulative tax collected over the eight-year period.

"However, the gap remains at £34bn, which means that the country cannot afford to be complacent.

"The Chancellor invested £1.3bn in HMRC to tackle avoidance, evasion and imbalances in the tax system at the July budget.

"But if the Treasury gives with one hand and takes away with the other in the upcoming Spending Review, it will seriously jeopardise efforts to carry on closing the gap.

"The National Audit Office has shown that for every pound invested in HMRC's efforts to reduce avoidance and evasion, the country gets £18 back.

That is why ARC calls for further investment as an alternative to cuts and that it is why we are pleased to hear more and more voices from the tax professions agreeing with us.

"Over the last week, both the Association of Chartered Certified Accountants' (ACCA) Head of Taxation and the Head of the Institute of Chartered Accountants in England and Wales (ICAEW) tax faculty have publicly given credit and praise to HMRC and its staff over the Tax Gap reduction. We are delighted to have the support of ACCA and ICAEW in our call for a properly-resourced HMRC.

"ARC will be discussing with HMRC how the department can make best use of the resources available. But it is clear that HMRC could deliver wider compliance and also better customer service if it had more resources.

"On 18 November, ARC will again call for the reinvestment that HMRC needs when it hosts a roundtable discussion in Westminster, with influential speakers including the Financial Secretary to the Treasury (FST) and the Shadow FST.

"ARC's core message remains: to invest in our members is to invest in public services. It is great that key opinion formers are taking note." 

Notes for editors

1. On 18 November ARC is hosting a roundtable discussion in Portcullis House, Westminster.
Chaired by Vanessa Houlder, Tax Correspondent at the Financial Times, speakers will include David Gauke MP, Financial Secretary to the Treasury; Rob Marris MP, Shadow Financial Secretary to the Treasury; and Heather Self of Pinsent Masons.
A number of tax myths will be discussed, including:

• tax affairs of the low paid are simple;

• closing the tax gap does not require a fully-resourced HMRC;

• tax competition will solve multinational corporation avoidance; and

• tax simplification is straightforward.

More than 70 guests will be attending, including MPs and representatives from the CBI, CIOT, ACCA, ICAEW, the Low Income Tax Reform Group, Oxfam, Action Aid and Christian Aid.

2. Chas Roy-Chowdhury, ACCA Head of Taxation said: "It is a huge credit to the staff at HMRC that they have managed to lower the tax gap despite constant cuts to their budget. However with £34bn still uncollected and the government struggling to meet its borrowing target the Chancellor should reconsider his decision to cut HMRC's resources."

3. Frank Haskew, Head of ICAEW tax faculty, said: "Given the substantial reduction in staff and budget over the years, HMRC deserves credit for making this progress and we believe that with additional resources the Tax Gap could be made even smaller".

4. The Association of Revenue and Customs (ARC) is a union representing senior staff in HM Revenue and Customs, including tax inspectors, accountants, lawyers, managers and other leading professionals. ARC represents members in HMRC at grade 7 and above, and also trainees in grade 7 entry schemes. It is also a section of the FDA.

5. The FDA is the trade union and professional body representing 18,000 of the UK's senior civil and public servants. Our members include policy advisors, senior managers, tax inspectors, economists, statisticians, accountants, special advisers, government lawyers, diplomats, crown prosecutors and NHS managers.

6. The FDA (formerly the First Division Association) should be referred to simply as "The FDA" and can be described as "the senior public servants' union".

7. The FDA can be found on Twitter @FDA_union and at www.fda.org.uk.

8. For further information contact:

· Tony Wallace, ARC President, tel: 020 7401 5555.

· Kay Hender, Communications Manager, tel: 020 7401 5589 or 07980 700747.