The latest HMRC figures showed that 56% of the tax gap related to underpayment or non-payment of tax by small businesses, accounting for £20.2bn of the total £36bn tax gap in 2021-22.

Non-compliance by small businesses has become an increasing problem for HMRC over the last five years, up from 40% of the total in 2017-18. 

Over the same tax year, large and mid sized businesses did not pay £7.7bn in taxes, an area where HMRC is having some success as non-compliance has fallen from 18% of the tax gap five years ago.

Criminal activity and evasion accounted for £4.1bn loss in tax collected.

Errors, a lack of sufficient care, evasion and criminal attacks all contributed to the tax gap. Nearly a third (30%) of all underpayments of tax were due to a failure to take reasonable care, while only 13% of instances were down to evasion. HMRC breaks down the figures so criminal activity is a separate 11% of the tax gap.