The government could recoup a additional £20bn a year if it improved the efficiency of its tax collection, according to analysis from the Local Government Association (LGA).

The LGA says its research suggests tax which goes uncollected by HMRC is costing the equivalent of £1,370 for every household in England and Wales.

The association bases its claims on government figures which it says indicate HMRC fails to collect some £32bn a year, made up of £14bn lost through tax evasion; £5bn from tax avoidance; £4bn of non-payment; £2bn of errors; £3bn for failure to take reasonable care; and £4bn of legal interpretation.

The LGA says that when this 'tax gap' total is compared with total HMRC receipts of £474bn, the result is a shortfall of about 6.75%. In comparison, local authorities last year collected 97.5% of the council tax and business rates due. The LGA maintains that if HMRC achieved similar performance levels for tax collection, then the public purse would have an additional £20.15bn.

Council leaders are now calling for the government to give a commitment to halving the uncollected tax deficit by the end of this Parliament.

Sharon Taylor, chair of the LGA's finance panel and Labour Leader of Stevenage Council, said: 'Local authorities collect council tax from more than 22m homes. If councils can obtain more than 97% of this, it is reasonable that Whitehall should be able to match this. Government has made positive noises on tackling unpaid tax. We now want to see a clear timetable which sets out how government will significantly improve their tax collection record.'

An HMRC spokesman said: 'The LGA have fundamentally misunderstood the nature of the tax gap which is not a measure of tax unpaid. In fact HMRC already collects 99% of all taxes and duties which are collectible from a very wide customer base of 60m taxpayers, increasing our tax take by £1.4bn to £475.6bn in the last year alone - on average we collect £1.3bn a day for the UK.'