Govt Losing A 'Staggering' £55bn A Year In Taxes

13 January 2014

Govt Losing A 'Staggering' £55bn A Year In Taxes

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

The scale of the losses was described as "worryingly high" and the Commons Public Accounts Committee (PAC) 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 £13.2bn 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 £20.6bn.

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 £35bn.

PAC chairman Margaret Hodge said: "It is staggering that, in one year, the public sector was defrauded of over £20bn and the tax gap rose to £35bn."

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.

It also voiced concern about the way the figures in the whole of government accounts (WGA) were compiled and presented.

The WGA - which was published for the 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 had been 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.

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