Insolvencies cost HMRC up to £4.4bn during 2012-13 due to non-payment of tax, according to its latest report.

The Tax Gap Estimate Report reveals that the total tax gap was £34bn and that insolvencies were responsible for 13% of that figure.

Insolvency trade body R3 have said that HMRC needs to become more involved in the process in order to reduce the loss.

Giles Frampton, president of R3, said: “HMRC is often the biggest creditor in an insolvency but they don’t always engage with the insolvency process.

“Input from experienced creditors can really help insolvency practitioners and Official Receivers bring back more money, not just for the taxpayer, but for all creditors.”

Insolvency experts believe that HMRC will continue to lose money in the coming years as the government has failed to set in place the necessary regulations to prevent rogue directors from shutting down their companies without paying their full tax obligations.

Mr Frampton said: “From next year, even more money will be lost by the taxpayer because of the government’s refusal to make insolvency litigation permanently exempt from the ‘Jackson’ legal reforms.

“These reforms will make it incredibly difficult to fund insolvency practitioners’ attempts to get money back from rogue directors for creditors. Approximately £300m worth of creditors’ money is pursued every year at the moment, including £70m owed to taxpayers.

“The government is shooting itself in the foot by not making insolvency litigation’s temporary Jackson exemption permanent. From next April, up to £70m of taxpayers’ money could stay in rogue directors’ hands.”