皇冠体育app practicality of a top down approach to the direct tax gap
A review of the literature and the experience of other tax administrations to assess the value of top down methods for estimating the UK direct tax gap
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HM Revenue and Customs Working Paper 12: 皇冠体育app practicality of a top down approach to the direct tax gap
This Working Paper reassesses the practicality of top down methods of estimating entire direct tax gaps.
皇冠体育app HM Revenue and Customs (HMRC) estimates indirect tax gaps using a top-down method, the difference between theoretical tax liability calculated from the national accounts and tax paid. In contrast direct tax gaps are calculated bottom up, by adding up estimates of all elements of the gap, generally using tax data, such as information from random enquiries, risk registers and data matching.
皇冠体育appre are a number of benefits of using top down methods. 皇冠体育appy give a single estimate, which by definition includes all elements of the tax gap, and are more timely. However, the single estimate gives no information on the constituent elements. HMRC has previously taken the view that top down methods cannot be used to measure entire direct tax gaps, because of the lack of independent data.