The errors made by HMRC also include, as the PAC note, HMRC’s failure to include tax avoidance that is abusive but about which they feel there is little they can do. This includes most of the abuse of international tax by large companies and much of the tax planning of the wealthy. One could, of course, accuse HMRC of replicating much of the class bias already apparent in their treatment of tax abusers in their tax gap estimates as a result, because it is undoubtedly true in the U.K. that only the ‘little people’ get prosecuted for their tax abuse. It could also simply be said that this systemically understates the tax gap and had always done so, again as I have long emphasised.
HMRC tries to estimate how much tax should be paid if everyone obeys the law. Then subtracts from that how much is paid which gives us the gap.
OK, well, so be it.
Tax avoidance is obeying the law. Even if Snippa thinks that the law should be different, or that avoidance shouldn’t be legal, or that it is the spirit, not letter, of the law that should be obeyed it is still true that tax avoidance, by definition, is legal. So it’s not what HMRC is trying to measure.