Advice Direct Scotland, which runs the free advice service taxadvice.scot, said it was vital for entrepreneurs to understand their obligations and deal with tax debts promptly as HMRC steps up enforcement to recover £7.5bn more in unpaid tax.

Official figures published today show the estimated tax gap for 2023 to 2024 at 5.3%, reflecting the difference between the tax expected and actually paid.

A total of £46.8bn was unpaid, up from £46.4bn the previous year following revisions to earlier estimates.

Smaller firms account for 60% of this shortfall, with errors and failure to take reasonable care cited as major causes.

The majority of small businesses in Scotland (98.2%) are non-employing or microbusinesses with fewer than nine employees.

Chancellor Rachel Reeves has pledged £1.7bn to HMRC over four years to hire nearly 8,000 additional compliance and debt staff and collect an extra £7.5bn.

Backed by HMRC, taxadvice.scot can provide support on a range of tax-related areas, including PAYE, National Insurance, and self-assessment.

Andrew Bartlett, chief executive of Advice Direct Scotland, said: “These figures are a stark reminder of how easy it can be for small businesses to fall foul of the tax system, often not through intent but because they are overwhelmed or unsure of what is expected of them.

“Failure to take reasonable care and simple mistakes account for nearly half of the tax gap. That tells us the problem is not always evasion but often confusion.

“With HMRC stepping up its enforcement, it is more important than ever to know your obligations and avoid surprise tax bills, which can be tough to handle.

“We are here to help small business owners understand what they owe and avoid common mistakes that lead to penalties.

“Whether you are checking your tax returns or struggling to pay, we offer free and confidential advice.

“People can visit taxadvice.scot or call 0800 756 3381 for support.”

Advice Direct Scotland is one of 12 voluntary and community organisations across the UK chosen by HMRC to provide tailored tax and benefits advice. It is the only organisation offering this service in Scotland.