Taxpayers Losing Money

According to a report from the Public Accounts Committee (PAC), around £55bn a year is being lost to taxpayers through fraud, error and unpaid taxes, with £13.2bn written off in 2011-12 due to error and fraud.

However, the figures do not include local government or public corporation data. As such the National Fraud Authority estimates the true figure to be around £20bn.

Meanwhile, HM Revenue & Customs (HMRC) has calculated that there is a £35bn “tax gap” between the taxes it was supposed to collect from individuals and corporations and the money it has actually raised.

Chair of the PAC, Margaret Hodge, said that taxpayer losses due to fraud and error are worryingly high, adding that it is staggering that, in one year alone, the public sector was defrauded of over £20bn and the tax gap rose to £35bn.

The TaxPayers’ Alliance was equally scathing, with a spokesperson saying that losing tens of billions of pounds in taxpayers’ money each year is totally unacceptable. However, they added that it is no surprise that so much is lost given that the country’s overly complex welfare and tax systems remain open to abuse.

However, a spokesperson for the Department of Work and Pensions said that the Government is determined to crack down and crack down hard on benefit fraudsters. They added that levels are fairly stable right now but that is “no reason to rest on our laurels”.

Undeterred by the defence, the Committee has called on the Treasury to develop, publish and implement an action plan setting out a strategy for tackling fraud through the public sector.