More than half of taxpayers in hospitality are under-reporting their income to HM Revenue and Customs (HMRC), the latest figures show.
While bed and breakfast owners and taxi drivers were judged to be the worst offenders, a study of official figures by the Institute of Fiscal Studies (IFS) found that some 50% of taxpayers in hospitality, construction and transport claimed they earned less than they really did.
The IFS found that most under-payments were less than £1,000, however a small minority of taxpayers owe more than £10,000. Men are more likely to under-report than women.
The analysis came as HMRC figures showed that £34b of tax went unpaid in the UK during the 2015-16 financial year.
The tax gap, which estimates the difference between actual receipts and what should, in theory, be collected, stood at 6% of all tax liabilities.
Failure to take reasonable care, or negligence when recording sales, was the biggest behavioural trait contributing to the gap, estimated at £6.1b.
The government said the tax gap was the lowest it had measured on record and was one of the slimmest in the world.
However, in the past decade it has always stood at around £30-£35b, causing some critics to question HMRC’s analysis.
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