Half of taxpayers in hospitality under-report their income

26 October 2017 by
Half of taxpayers in hospitality under-report their income

More than half of taxpayers in hospitality are under-reporting their income to HM Revenue and Customs (HMRC), the latest figures show.

While bed and breakfast owners and taxi drivers were judged to be the worst offenders, a study of official figures by the Institute of Fiscal Studies (IFS) found that some 50% of taxpayers in hospitality, construction and transport claimed they earned less than they really did.

The IFS found that most under-payments were less than £1,000, however a small minority of taxpayers owe more than £10,000. Men are more likely to under-report than women.

The analysis came as HMRC figures showed that £34b of tax went unpaid in the UK during the 2015-16 financial year.

The tax gap, which estimates the difference between actual receipts and what should, in theory, be collected, stood at 6% of all tax liabilities.

Failure to take reasonable care, or negligence when recording sales, was the biggest behavioural trait contributing to the gap, estimated at £6.1b.

The government said the tax gap was the lowest it had measured on record and was one of the slimmest in the world.

However, in the past decade it has always stood at around £30-£35b, causing some critics to question HMRC's analysis.

Restaurants, pubs, bars and nightclubs face £213m tax hike in November Budget >>

Tough September trading hits restaurants, pubs and bars >>

Oakman Inns boss warns government: "Take action or investment will slow" >>

Videos from The Caterer archives

Are you looking for a new role? See all the current hospitality vacancies available with The Caterer Jobs

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking