Ministers 'staggered' at tax dodging under Labour

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The gap between tax revenues and the amount that should have been raised grew from £38 billion to £42 billion in 2009, the latest year for which figures are available.

It means that £9 in every £100 that ought to be collected in revenues is missed or avoided, costing the Treasury tens of billion of pounds that could otherwise spare the need for spending cuts.

Inaccurate self-assessment on income tax accounted for more than £5 billion of losses. Another £6.5 billion was in corporation tax.

The biggest rate of loss was in handrolled tobacco, where smuggling means half the annual revenues are lost. A third of diesel duty in Northern Ireland went unpaid.

In the previous three years the overall tax gap had been steady at £37 billion or £38 billion, according to official statistics. The figures are an embarrassment to Labour, which has backed trade union calls for action on tax avoidance and evasion.

Coalition ministers said the rise showed that under Gordon Brown the rich had found it easier to avoid taxes. Exchequer Secretary David Gauke said: "The tax gap number is staggering and this Government is committed to taking the necessary action to bring it down - by taking steps to reduce tax avoidance and evasion, including by the richest people in our society, so that everyone pays their fair share and we reduce the tax gap over the coming years."

In the Commons on Monday, Chancellor George Osborne predicted that MPs would be "staggered" to learn how bad the problem had been under Labour.

He promised a fresh crackdown, saying: "We will be taking steps to reduce tax avoidance, including tax avoidance by the richest people in our society, so that everyone makes a contribution."