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The ONS adjust their estimate of the size of the economy to account for unrecorded transactions involving small businesses and sole traders, based on HMRC’s assessment of lost revenue.
HMRC also publish an annual estimation of the tax gap, which, in 2010-11, was estimated to be £32 billion, equivalent to 6.7 per cent of tax liabilities.
The Government is investing in HMRC to tackle tax avoidance and evasion and to reduce losses from fraud, error and debt — this includes almost £1 billion over this Spending Review period, to bring in an additional £9 billion a year in tax revenue by 2014-15. The June 2013 Spending Round announced that HMRC’s compliance yield target will be increased from £23.5 billion in 2014-15 to £24.5 billion in 2015-16.