Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps her Department is taking to (a) reduce the levels of tax evasion by of cash-only high street businesses and (b) support small businesses to adopt card payment systems.

HMRC is committed to ensuring the tax system operates fairly and efficiently, creating a level playing field for compliant businesses. Most businesses pay what they owe, but a minority fail to register or only declare a portion of their earnings for tax. This minority deprives our vital public services of funding, affects fair competition between businesses, and places unfair burdens on everyone else.

Cash is a legitimate means of paying for goods and services and continues to be used by many people across the UK. The Government’s position is that individuals and businesses can choose whether to accept or decline any form of payment, and this choice can be based on factors such as customer preference and cost. If a person or business receives cash payments, it is their responsibility to ensure they meet their tax obligations, including registering for and paying the right taxes.

At the autumn budget in October 2024 the government introduced the most ambitious package ever to close the tax gap, raising £6.5 billion in additional tax revenue per year by 2029-30. The government built on this at Spring Statement in March 2025, announcing a package of measures to further close the tax gap and raise over £1 billion in additional gross tax revenue per year by 2029-30.

HMRC’s approach to tax compliance includes a range of activities that aim to both detect and tackle current non-compliance and change future behaviours. We aim to help and support customers to understand their tax obligations and promoting compliance by simplifying policies and procedures, providing clear guidance to make it easy for them to get things right, providing accessible digital services to make it easier to register to pay the appropriate taxes, providing targeted support and guidance, and intervening early to reduce mistakes.

HMRC are making it increasingly difficult for people and businesses to hide their income, using improved targeting with new data sources, third-party data and focused compliance activity. We will not hesitate to use stronger sanctions against those who deliberately choose not to comply. This includes potential criminal prosecutions for the most serious cases involving tax evasion.