Recent research undertaken by HM Treasury shows an 8.5 per cent tax gap across VAT, equating to a £12.3bn yearly loss for the Exchequer. VAT is the largest contributor, with over a third of the UK’s total tax gap.
Fraud and a failure to account for VAT is evidently widespread. Perhaps this is unsurprising given its complexities and its self-declaratory nature. Charities exist in one of the more complex areas of VAT accounting, so increasing their exposure.
To reduce this tax gap, HMRC is looking harder at measures across the wider supply chain to move risk and help it to ‘police’ the collection of VAT.
Source RSM
