The tax gap is in the news as the government struggles with the deficit. David McCandless explains how big it actually is

Vince Cable's attack on the 'murky' city has focused attention on the tax gap. But what is it?

How big is the tax gap?

The tax gap is the difference between collected tax and the potential total tax out there. The gap is caused by tax avoidance, evasion, black markets, errors and lack of "reasonable care" when filling in tax returns.

Currently, the lowest estimate puts the figure at £42bn a year: the highest around £120bn. Either way, even if 10% of this amount was recovered, it would significantly reduce the necessity of wholesale cuts to government.

About this image

This chart attempts to visualise how the tax gap breaks down and how certain tricks and avoidance measures are apparently kept "off the books".

We went through all the figures we could find, both official (from HM Revenue & Customs) and unofficial (from TUC consultant Richard Murphy). We took the most cautious and conservative route through both.

This may be the most difficult diagram I've ever done. The information and data is swathed in obfuscation, economic jargon and subtle sleight-of-hand definitions and sub-definitions that mask the meaning from interested readers. It was a real struggle. I hope it and the data make sense.

The Data

• See our organised data here: http://bit.ly/taxgap

• HMRC 2010 Report on the tax gap (PDF)

• Appendix to that report (contains interesting figures about Tax Havens) (PDF)

• TaxResearch.Org.Uk

Thanks to James Key for additional research

About me

I run InformationIsBeautiful.net, dedicated to visualising information, ideas, stories and data.

This is an adapted page from my book of infographic exploria, Information Is Beautiful. In the US, the book's called The Visual Miscellaneum

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