The UK public purse is losing approximately £5.5 billion in potential revenue due to tax evasion, according to a report by the National Audit Office (NAO).
Most of the loss in the 2022-23 tax year was among small businesses, at 81%, up from 66% the tax year to April 2020, though stats from HM Revenue and Customs (HMRC), the UK tax collector, shows the overall level of tax evasion has stabilised in recent years.
HMRC was criticised in the report for not focusing enough on this issue, as small businesses "can easily exploit weaknesses in government systems".
The NAO said the tax office "does not have a specific strategy to clamp down on tax evasion", so it lacks a focus on this area, with its aim being to stop overall levels of non-compliance from increasing.
Simultaneously, HMRC faces its own internal problems, with dismissals for gross misconduct reaching a five-year high, according to data obtained by the Telegraph.
This year, 179 workers have been sacked, a 43% increase since 2020.
This rise in dismissals, attributed to serious breaches such as fraud and gross negligence, reflects a tougher stance within the tax office. However, concerns persist over staff conduct and the overall impact on HMRC's operational effectiveness.
As HMRC prepares to receive additional funding for staff recruitment, ensuring proper training and maintaining service standards will be critical to addressing both tax evasion and internal disciplinary issues.