UK losing billions of pounds in taxes annually

Unpaid taxes, fraud and error are costing Britain billions of pounds a year, Members of the British Parliament have warned.

Lawmakers said the annual losses amount to £55 billion, including the total tax gap and the cost of fraud to the public sector in the UK.

Britain’s HM Revenue and Customs (HMRC) calculated that the difference between the taxes it was supposed to receive and those it managed to collect in 2011-12 was £35 billion.

Moreover, the UK’s Treasury figures showed that some £13.2 billion had to be written off due to fraud and error between April 2011 and March 2012, but the National Fraud Authority (NFA) estimated the cost of fraud to the public sector to be £20.6 billion.

The UK’s House of Commons Public Accounts Committee (PAC) described the scale of the losses as “worryingly high”.

British Labour MP Margaret Hodge, who chairs the committee, said, “It is staggering that, in one year, the public sector was defrauded of over £20bn and the tax gap rose to £35bn.”

She also called on the Treasury to implement a strategy aimed at tackling fraud because of its impact on the deficit in the public finances.

Earlier in September, the PAC also accused the Cabinet Office and the Treasury of failing to use their financial might to make companies awarded government contracts pay their fair share of tax.

Last year, Business giants Starbucks, Google and Amazon were found guilty of dodging millions of pounds in tax in Britain.

It is estimated that the corporate tax evasion is costing the UK economy something between £45 to £90 billion a year, meaning that it is practically undoing all austerity measures as well as widening the gap between the rich and the poor in the British society.