Tax dodgers are draining the exchequer of more than £1bn a year, according to an official report that urged Revenue & Customs to use data-screening techniques to track down offenders.

Potential evaders such as owners of expensive cars with little declared income could be spotted by comparing vehicle licensing data with tax records, said the National Audit Office, the public spending watchdog. The Revenue could also compare local authority licences for doormen, street traders and taxis with tax records to identify individuals operating in the hidden economy.