Tackling tax evasion among small businesses

The National Audit Office (NAO) published its report into tackling tax evasion in high street and online retail on 9 September (tinyurl.com/naotteinhsandonl). The report highlights weaknesses in HMRC’s approach to tackling tax evasion in small businesses – notably among high street and online retailers.

HMRC estimate that small businesses’ error and fraud comprise 60% (£23.88bn) of the total UK tax gap. Tax evasion (excluding criminal attacks and hidden economy) is 14% (£5.5bn) of the tax gap and 81% of evasion losses came from small business in 2022-23.

While individual cases of tax evasion by small businesses may not necessarily result in a big tax loss to the Treasury cumulatively losses amount to an eye-watering £4.5bn. HMRC estimate electronic sales suppression (ESS) accounted for £450m of losses and phoenixism losses were estimated at £500m.

The report

The purpose of the NAO report is to examine whether HMRC...