Mr. Niall Cody:

There is no international acceptance that tax gap analysis is the best measure. Tax gap analysis is arrived at in a number of ways. Sometimes it is taken from the top down, one uses the Central Statistics Office's GNP figures and national accounts figures and then one works out a theoretical gap. However, the reality is that tax evasion and the shadow economy are, by their nature, hidden and the figure is always an estimate.

The country that has gone furthest down the road of tax gap analysis is the UK. The authorities there do it annually and it is their major measure of the success of the organisation. What happens every year is that HMRC arrives at a tax gap analysis which is subsequently amended by national accounts figures. One has an agreed tax gap for 2013, in 2014, that is changed and in 2015 it is changed, depending on what happens with national statistics.

Some of the issues around identifying the top-down approach is that there is an estimated figure put into the national accounts for the shadow economy and then one works out the shadow economy based on an estimate that has gone in to the overall figures. Sometimes you are actually chasing your tail.