Original article by Simon Lock and Ed Siddons republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

The taxman has the numbers needed to estimate how much cash is lost to overseas havens – but it isn’t sharing the details

An MP has demanded HMRC release its official estimate of how much tax is being lost to offshore havens – information we discovered is currently being withheld by the authority.

A Freedom of Information request by TaxWatch, shared with TBIJ, revealed that in apparent contrast to its previous claims, HMRC holds data needed to estimate the offshore tax gap. But it would not hand the information over.

“We urgently need HMRC to clarify the situation – otherwise we will never crack down on tax dodging,” said Lloyd Hatton MP, who sits on the Public Accounts Committee.

The offshore tax gap is the difference between the amount of tax the UK should collect from offshore sources, and what it actually receives. It puts a number on the cost to the public when people and companies move their money offshore to avoid, evade or fail to declare tax.

HMRC has previously claimed that it holds no estimate for the overall offshore tax gap. But in response to a recent FOI request, the tax authority revealed that it does in fact hold a figure for “offshore tax at risk”.

This number is the amount of tax HMRC thinks could be lost because of avoidance, evasion and non-compliance. HMRC has said itself that this could be used to work out the offshore tax gap. All HMRC would need to do is subtract from it another number called the “compliance yield” – the amount HMRC did manage to claw back through enforcement activities.

HMRC has even published its figures on the compliance yield for offshore-related tax, meaning it already has data needed to calculate the offshore tax gap figure.

But in response to our FOI request, HMRC refused to disclose the “tax at risk” figure on the basis it could “prejudice the effective conduct of public affairs”.

The correspondence calls into question direct statements made earlier this year by the head of HMRC to the Public Accounts Committee (PAC), whose role is to scrutinise government departments.

In February, the authority’s CEO Jim Harra wrote to the PAC’s chair to say his organisation did not hold figures on the total offshore tax gap. Instead, he referred to a number published by the agency in 2024.

Back then, this partial number – gathered from self-assessment tax returns – was referred to as “experimental statistics” and it estimated that tax from offshore sources was underpaid to the tune of only £0.3bn.

We urgently need HMRC to clarify the situation – otherwise we will never crack down on tax dodging

Lloyd Hatton, MP

This figure has been called into question as too low by the Public Accounts Committee. By comparison, the UK’s entire tax gap is estimated by HMRC to be nearly £50bn.

Commenting on the new FOI correspondence, Hatton said: “The Public Accounts Committee report [in July] showed that HMRC is incapable of identifying those super-wealthy individuals who choose to squirrel away their wealth – often using offshore accounts in tax havens.

“Without this, it cannot effectively pursue those who deliberately avoid or evade paying their fair share of tax.

“The Committee has pressed for greater transparency concerning tax lost offshore, without this information we cannot properly assess whether HMRC’s compliance efforts are effective or adequately resourced. And – even more crucially – we cannot go after egregious tax dodging.”

A spokesperson for TaxWatch said: “We understand that HMRC has a responsibility to ensure that it’s publishing accurate information. But there seems undue secrecy around this figure, which is routinely published for other types of tax and taxpayer.”

It marks yet another turn in the hunt for clarity on just how much tax is avoided or evaded offshore. In 2022, then Treasury Minister Lucy Frazer vowed that HMRC would publish the much-desired offshore tax gap figure, but in the run-up to the general election, HMRC demurred.

A spokesperson for HMRC said: “We are working to assess the feasibility of broadening the scope of the published estimate of the offshore tax gap, as stated to the Public Accounts Committee, and will report back to them.”

Original article by Simon Lock and Ed Siddons republished from TBIJ under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.