- Definition and Preliminary Estimate: The VAT gap represents the difference between the net VAT total theoretical liability (VTTL) and actual VAT receipts. For the tax year 2023 to 2024, the preliminary estimate indicates a VAT gap of £9.5 billion, or 5.3% of the VTTL, reflecting an increase from the previous year’s gap of 4.9% (£8.1 billion).
- Methodology and Data Sources: The preliminary estimate utilizes a top-down approach, incorporating comprehensive household expenditure data from the Office for National Statistics (ONS) and forecasts from the Office for Budget Responsibility (OBR). It is based on full-year data that accounts for approximately 70% of the VTTL, while the remaining 30% is estimated, with revisions expected in future publications based on updated data.
- Publication Schedule and Future Estimates: HMRC plans to revise the VAT receipts figures on 21 March 2025 and will publish a second estimate of the VAT gap for 2023 to 2024 on 26 March 2025. This ongoing assessment will integrate new data, including ONS Consumer Trends and National Accounts Blue Book information, providing a more accurate understanding of the VAT gap and its implications for fiscal policy.
Source gov.uk
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