- The UK VAT gap for 2024–2025 is estimated at 6.5% (£11.9bn), up from 5.0% (£8.9bn) in 2023–2024.
- The VAT gap measures the difference between expected VAT receipts and actual collections, using economic data to estimate theoretical liability.
- Despite the recent increase, the long-term trend shows a significant reduction in the VAT gap since 2005–2006.
- The UK’s VAT gap remains a challenge, similar to other EU countries, with many adopting digital reporting to improve compliance.
- The increase signals ongoing difficulties for tax authorities in closing the gap between expected and collected VAT.
Source: innovatetax.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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