The tax gap for the 2020 to 2021 tax year is £32bn, although the monetary value has fallen by £2bn from £34bn in the 2019 to 2020 tax year.

Small businesses represent the largest proportion of the tax gap by customer group at 48% (£15.6bn), followed by criminals at 16% (£5.2bn).

The level of small business tax avoidance is up £500m compared with the previous year and is an area that HMRC needs to focus on to close the tax gap. Some of the reasons for their failure to pay the correct tax is due to understated earnings and errors.

Failure to take reasonable care accounts for the largest proportion of the tax gap at 19% (£6.1bn) while error accounts for 9% of non-payment of taxes at £300m.