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Tax Evasion 2018 Statistics

The following information has been researched and put together by Patrick Cannon to provide an up-to-date and current page of all UK 2018 tax evasion statistics.

Key Statistics

Tax Evasion Statistics 2018 - Patrick Cannon

  • £5.3 billion of the UK “tax gap” is due to tax evasion
  • Around £70 billion of revenue has been lost to tax evasion overall in the UK
  • 3,809 UK tax evasion cases were heard in the last financial year (2017-2018), the tax evaded in these cases was around £37 billion altogether
  • 40,695 people reported UK tax evasion hotline in 2017-2018
  • Income tax accounts for as much as 23% of the government’s total revenue

How Many Cases of Tax Evasion Have There Been in the UK This Year?

Tax Evasion cases in the U.K - Patrick Cannon

During the 2017 to 2018 financial year, there were a total of 3,809 tax evasion cases recorded.

Records of tax evasion stats suggest that the number of cases brought to light has been increasing, with 593 more arising since the previous financial year (2016 to 2017) and 837 more now occurring than were recorded in 2015 to 2016.

This leaves us with a total of 9,997 tax evasion cases taking place over the last three years. Broken down into the following:

  • There have been 3,809 known tax evasion cases in the UK in the financial year 2017/8
  • There were 3,216 known tax evasion cases in the UK in the financial year 2016/7
  • There were 2,972 known tax evasion cases in the UK in the financial year 2015/6

Tax Evasion Punishment Statistics

This previous financial year, 140 people were investigated for offshore tax evasion offences. Of this number, there were four arrests and six interviews under caution relating to the Panama Papers scandal, which can be read about in more detail below.

Arrests for Tax Evasion in 2018 - Patrick Cannon

Both domestic and global initiatives have now been put in place in order to tackle offshore tax evasion, with a combined £2.8 billion having been spent on their investigations since 2010.

Many of the individuals prosecuted for tax-based crime were found to be company directors, accountants and organised criminals – each of whom tend to handle large financial assets.

Cost of Tax Evasion in the UK

HMRC reported in June 2018 the total tax gap at £33 billion for 2016/17, representing 5.7% of total tax liabilities.

Throughout the tax year running from 2016 to 2017, the total cost of tax avoidance came to approximately £1.7 billion, while tax evasion was around £5.3 billion within the same time frame.

Overall, it’s estimated that the UK’s loss of revenue due to tax evasion comes to around £70 billion.

£2 billion has so far been recovered from perpetrators of offshore tax evasion in just under a decade.

Panama Papers Statistics

Panama Papers statistics - Patrick Cannon

The “Panama Papers” constituted the biggest tax evasion case in history and resulted in a global scandal. In total, they involved more than 40 years’ worth of data relating to tax fraud.

The case involved 11.5 million files, 4.8 million of which were emails and 1 million of which were images.

It truly was a worldwide matter, with the names of people and institutions based in 200 countries and territories mentioned within the files, and more than 214,000 companies and 21 offshore “tax havens” being investigated as a result.

Of these, 113,000 – more than half of the companies scrutinised throughout the case – were incorporated in the British Virgin Islands and the scheme involved more than 14,000 clients and recipients overall, including 109 media organisations.

How Many Tax Fraud Cases Are Reported?

Cases of Tax Evasion been reported - Patrick Cannon

The HMRC hotline via which members of the public use to report suspected fraudulent behaviour relating to tax evasion averages around 250 calls every single day.

Throughout the year running from 2017-8, the line was called by 40,695 people.

This is more than double the calls from the previous year (2016-7) which totalled 20,200 reports.

UK “Tax Gap” Statistics

Tax Gap statistics U.K 2005 - 2017 - Patrick Cannon

What is the ‘tax gap’?

The phrase “tax gap” refers to the difference between the amount of tax that should be paid to HMRC each year and the amount that is actually received by the government.

The tax gap in the UK is currently estimated to be worth about £33 billion, which is 5.7% of tax liabilities. Around five per cent of the total amount is thought to be due to illegal tax evasion.

Throughout the previous tax year (2017-18), the gap has increased by around £1 billion since it was last measured in 2017. However, in the long term, the gap is decreasing. Since 2005, the size of the gap has reduced from 7.3%, to 5.7% in 2017.

Reasons for the UK Tax Gap

There are a number of reasons for the existence of the UK tax gap, the majority of which involve fraudulent financial activity and tax evasion. They include:

  • Tax evasion in the shadow economy
  • Tax lost as a result of other criminal or fraudulent activity in the UK economy
  • Capital Gains Tax and Inheritance Tax evasion
  • Offshore tax evasion
  • Tax evasion on investment and rental income
  • The failure by HMRC to bring criminal prosecutions for tax fraud in order to set an example to would-be tax cheats who thereby feel emboldened to cheat

Breaking matters down further, investigations have concluded that:

£13.7bn is estimated to come from small business
£7bn is estimated to come from large business
£5.4bn is estimated to come from criminals
£3.9bn is estimated to come from medium businesses
£3.4bn is estimated to come from individuals

Tax Gap contribution - Patrick Cannon

£13.5bn is estimated to come from Income Tax, National Insurance Contributions (NICs) and Capital Gains Tax
£11.7bn is estimated to come from Value Added Tax (VAT)
£3.5bn is estimated to come from Corporation Tax
£3.1bn is estimated to come from excise duties
£1.6bn is estimated to come from other taxes

Missing Tax Gap - Patrick Cannon

£5.9bn has resulted from the failure to take reasonable care
£5.4bn is from criminal attacks
£5.3bn is from legal interpretation
£5.3bn is from tax evasion
£3.2bn comes from errors
£3.2bn is from the hidden economy
£1.7bn is from tax avoidance

Reasons for Tax gap - Patrick Cannon

UK Statistics Relating to Undeclared Earnings

Of the 66.57 million people residing in the UK, 5.7 million fail to declare earnings made through what have become known as “side hustles” – ventures undertaken outside of our main employment, such as selling items online or taking on freelance work. It’s not commonly known that individuals are expected to pay taxes on their extra earnings, but if the total amount earned values at over £1000 – the money becomes a taxable asset. This regulation is not necessarily well communicated and may contribute to the vast amount of Brits not paying tax on their ‘side hustles’.

This unknowingness has led to an estimated total amount of £23.5 billion being earned throughout 2017 without being correctly taxed.

Regional Break Down

Not declaring HMRC averages - Patrick Cannon

London is home to the highest percentage of individuals who fail to declare an amount of their income, with 30.9% of them doing so. On average, residents of this region earn around £8,991 without paying tax.

London is followed by the North East (26.5%) and the North West (12.4%). As for how much money was being made off the books, Londoners again top the ranks at £8,991.36, followed by East of England at £7,370.82 and the North East at £3,888.60.

Gender Break Down

Gender Break Down of not declaring tax to HMRC - Patrick Cannon

19% of men make undeclared amounts from a “side hustle”, and the average man fails to declare around £4,571 of his income – while 8.3% of women take on undeclared work on the side and the average woman takes home £3,091 worth of untaxed finances.

Generation Break Down

Generation Breakdown not declaring tax to HMRC - Patrick Cannon

The generation who fail to declare the highest amount of taxable income are millennials. 27.7% of people within this age group (made up of people born between 1981 and 1996) make money and fail to declare it, meaning this is the largest percentage of any generation to commit this type of financial crime.

Generation X – people born between 1965 and 1980 – see 14.05% of their number failing to declare any of their finances.

6.9% of Baby Boomer (those born between 1946 and 1964) neglect to declare all of their income – though this is the generation that makes more money tax-free than any other, with the average amount sitting at £5,660 compared to the £5,503 earned by Millennials and £2,030 made by members of Generation X.

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