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£1bn lost to tax evasion last year

Tax evasion offences could be cut by imposing more effective punishments on offenders, it has been claimed. According to a new report conducted by the National Audit Office (NAO), HM Revenue and Customs (HMRC) misses out on around £1 billion in taxes every year. One of the principal causes of this is the "relatively low" fines issued, the NAO said, and called for these to be raised to tackle the problem. The report also revealed that the total spend for tackling tax evasion last year stood at £41 million. However, it had effectively managed this budget by returning £4.50 to the economy for every £1 it spend it was calculated. Tim Burr, NAO comptroller and auditor general, said: "HMRC has experimented with new ways of encouraging people into the formal economy and it is managing to detect more unpaid tax. "It could make better use of penalties and secure greater publicity for prosecutions to discourage people from operating in the hidden economy."He added: "With well over £1 billion in unpaid tax each year, it is important that the Department becomes more effective in tackling the problem."

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