LONDON Oct 18 Britain's taxman said the cost of
non-compliance with tax rules cost the government 32 billion
pounds ($51.73 billion) in lost revenues in 2010-11, up from 31
billion a year earlier.
Tax avoidance has become a charged subject in Britain amid
austerity budget cuts and the government is under pressure to
show it is ensuring big business and the wealthy bear their
share of the economic burden.
A Reuters report on Monday that coffee chain Starbucks
paid no corporation tax for three years despite
notching up 1.2 billion pounds in sales, prompted calls from
lawmakers for an HMR C pr obe and for a tightening in tax
The increase in the 'tax gap' was due to an increase of
non-payment of value added tax (VAT) and a growing failure of
large companies to pay the appropriate level of corporate income
tax, Her Majesty's Revenue and Customs (HMRC) said.
The tax authority added that, as a percentage of total tax
liabilities, the tax gap fell to 6.7 percent from 7.1 percent.
However, Richard Murphy, a former tax advisor turned tax
campaigner with Tax Research UK, said the figures likely
underestimated the level of non-compliance.
"The numbers to me smack of wishful thinking," he said.
"The evidence all over the world is that as a recession
bites, the tax gap rises sharply (as a percentage of total tax
due)," he added.
Campaigners are also critical of the tax gap as a measure of
non-compliance as it does not include losses due to many legal
tax avoidance measures, including some used by Starbucks to cut
its tax bill.
HMRC defines the tax gap as the difference between the
actual tax collected and what would have been collected if
individuals and companies complied with the letter and spirit of