A glossary of technical terms is included at the back of the report. Particular thanks are due to Mike Williams and Andrew Sanderson. Every year billions of pounds are lost to the informal, or hidden economy. Others defraud the social security system by claiming benefit for being unemployed when they are in work. Many employers are committing or colluding in a range of different offences at the same time.
Honest taxpayers have to pick up the bill.
Some of those in the informal economy would like to come clean. But they may not know what opportunities exist in the regular economy or how to take advantage of them. It is important to take steps to encourage these people and their businesses to become legitimate. To prevent people joining the hidden economy, Departments must try to ensure that they are registered correctly and comply with the tax and benefit rules from the outset. Detection For offenders who do not respond to these incentives, the best solution is to improve the rate of detection and the effectiveness of punishment.