Belfast Telegraph

Home News UK

Call for action over £55bn tax loss

The taxpayer is losing a "staggering" £55 billion a year due to fraud, error and unpaid taxes, MPs have warned.

The Commons Public Accounts Committee (PAC) described the scale of the losses as "worryingly high" and expressed concern about the impact on the deficit in the public finances.

The whole of government accounts drawn up by the Treasury show that in 2011-12 about £13.2 billion had to be written off due to fraud and error.

However the figures do not include local government or public corporations and the National Fraud Authority estimates the true cost of fraud to the public sector was £20.6 billion.

At the same time HM Revenue and Customs has calculated the "tax gap" - the difference between the taxes it is supposed to receive and those it actually manages to collect - was £35 billion.

PAC chairman Margaret Hodge said: "Taxpayer losses due to fraud and error are worryingly high. It is staggering that, in one year, the public sector was defrauded of over £20 billion and the tax gap rose to £35 billion."

The committee called on the Treasury to develop, publish and implement an action plan setting out a co-ordinated strategy for tackling fraud and error throughout the public sector.

"This work should be clearly prioritised across government because of the impact on the deficit," it said.

The committee also voiced concern about the way the figures in the whole of government accounts (WGA) were complied and presented.

The WGA - which was published for first time last year and now covers the combined financial activities of 3,000 bodies - is intended to provide the most comprehensive accounting picture of the public sector in the UK.

However the committee said its credibility was undermined by the "poor quality" of some of the data and the Treasury needed to do more to explain the discrepancies between some of the figures in the WGA and those produced by the Office for National Statistics.

A Government spokesman said: " As the PAC says, the whole of government accounts provide the most comprehensive picture of all the assets and liabilities in the public sector.

"The Government's priority is to cut the deficit and we are committed to clamping down on tax avoidance and evasion, and fraud, error and debt in the benefits system.

"Action taken by the Government since 2010 cut fraud and error against the public purse by £6.5 billion last year but losses from fraud are still too high."

A package to tackle fraud and error announced in the Autumn Statement would bring in £2.3 billion over the next three years, the spokesman said, with measures to tackle tax avoidance due to provide a £6.8 billion boost over the same period.

But shadow chief secretary Chris Leslie said: "Taxpayers will be appalled by how much money is being lost by this Government each year. And this comes on top of the billions David Cameron's Government has wasted on things like the failure to deliver Universal Credit and the reckless reorganisation of the NHS.

"At a time when people are facing a cost-of-living crisis and the deficit is high, this is unacceptable. It's time David Cameron and George Osborne got a grip and tackled the billions being lost to the Exchequer each year."


From Belfast Telegraph