Government losing £55bn a year in taxes, £13bn through fraud and error

MPs said that the UK is losing a “staggering” £55bn a year because of fraud, error, and unpaid taxes.

14:03 12 December 2013

As it was revealed that Britain is losing out on £55bn in year in uncollected taxes, MPs have warned that losses are “worryingly high” while the Commons Public Accounts Committee expressed concern about the impact on the deficit in the public finances.

Figures released by the Treasure confirms that in 2011-12 alone, about £13.2bn was lost due to error and fraud. This number doesn’t include public corporations and local government.

The National Fraud Authority estimates the cost of fraud to the public sector was closer to £20.6bn.

Also, HM Revenue and Customs reported that there is about £35bn tax gap between the taxes it supposed to receive and those it actually manages.

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 has called on Treasury to take action in order to effectively tackle fraud and error in the public sector. It also voiced concern about the way the figures within the government’s accounts were compiled and presented.