HMRC has estimated that £16bn a year of tax fraud is lost in cyber-attacks and smuggling every year. The figure, contained in a report by the National Audit Office, makes up almost half of the £34bn tax gap. The rest of the gap comes from genuine error, legal avoidance and other non-payments. The NAO criticised tax investigators for focusing efforts on easy, low value prosecutions for evading income tax, VAT and tobacco duty rather than pursuing multinationals involved in evasion and aggressive tax avoidance schemes. Margaret Hodge, chair of the all-party group on responsible taxation, said: "HMRC still focuses too much on small businesses - the easy wins - and lets the big multinationals off the hook. It's one thing to tackle evasion, I want them to be much tougher on aggressive tax avoidance. All we are asking is that people pay a fair amount on the profits they make from their business in the UK.” In 2014/15, HMRC reported £26.6bn additional revenue from its work to improve compliance. The NAO estimated that the proportion of this that came from work to tackle fraud was between 30% and 40%. The UK's tax take rose 2.4% to £517.7bn last year and HMRC has met a target to increase its number of prosecutions by 1,000 by 2014/15, but the NAO said it "needs to better prioritise the cases it selects for criminal investigations".
