HMRC has published details of the VAT gap for 2020 – 2021.
The VAT Gap
The VAT gap is measured by comparing the net VAT total theoretical liability with tax actually paid. This is comparing the amount of VAT HMRC expected to receive in the UK and the VAT HMRC actually received.
The figures
The net VAT theoretical liability £129 billion
Net VAT received £101.7 billion
Net VAT receipts related to net VAT total theoretical liability £120.4 billion
VAT gap £8.6 billion
The VAT gap is therefore 6.7%.
Notes
The 2020 to 2021 net receipts figure in the VAT gap includes an adjustment for payments that were deferred in 2020 under the VAT Payments Deferral Scheme in response to Covid-19. They also reflect reduced VAT rates for the hospitality sector, holiday accommodation and attractions, and zero rate for personal protective equipment.
Methodology
Information on the method used to estimate the VAT gap is here for those interested (I don’t imagine that there will be that many…).
Reduction
The estimate of the VAT gap for 2020 to 2021 £8.6 billion shows a reduction compared with the estimate of the VAT gap for 2019 to 2020 which was £12.3 billion.
Previous year’s VAT gap figures for comparison here.
This seems to be an awful amount of tax which has “gone missing”.