Tax Collection

HM Treasury written question – answered on 12th July 2016.

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Photo of Tulip Siddiq Tulip Siddiq Labour, Hampstead and Kilburn

To ask Mr Chancellor of the Exchequer, with reference to table 7.1 of HM Revenue and Customs' document, Measuring Tax Gaps, 2015 Edition, published in October 2015, what definition his Department uses of the terms (a) technical risks not subject to litigation, (b) avoidance risks subject to litigation and (c) technical risks subject to litigation; and what enforcement options are available to recover money identified from technical risks not subject to litigation.

Photo of David Gauke David Gauke The Financial Secretary to the Treasury

HM Revenue and Customs (HMRC) published its latest tax gap estimates on 22 October 2015 in Measuring tax gaps 2015 edition and is available here: https://www.gov.uk/government/statistics/measuring-tax-gaps. A Methodological Annex was also published on the same date.

In Measuring tax gaps 2015 page 65 sets out the definitions of risks. Risks are classified into two broad categories; avoidance and technical risks. The avoidance category relates to the use of disclosed avoidance schemes and other suspected avoidance identified by our tax specialists. Technical risks cover a wide range of risks: from cases where there is genuine uncertainty about the correct tax treatment, through mistakes to culpable errors in, or omissions from, the company tax return.

Avoidance and technical risks are split into four main categories according to how the risks are worked by HMRC (Methodological annex page 59):

a) Technical risks where agreement has been reached b) Technical risks where agreement is expected c) Avoidance risks where the enquiry is closed or the risk is being worked d) Technical risks that have been litigated or are leading to litigation.

Enforcement options to recover money identified from technical risks not subject to litigation are treated the same as any other non-compliance. The enforcement actions HMRC can take to get any tax owed are published on the gov.uk website https://www.gov.uk/if-you-dont-pay-your-tax-bill.

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