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Although difficult to quantify with any degree of accuracy, revenue bodies generally acknowledge that the underground economy is a significant source of revenue loss. Building on the Forum’s previous work on compliance risk management, this note explores the approaches and experiences of member revenue bodies in addressing tax risks associated with the underground economy, including the use of electronic payment systems to both conceal and reveal unreported income.

It provides examples of overarching strategies to address the underground economy and measures directed at specific tax risks, and sets out the common elements of the strategies and treatment tools used by revenue bodies across the FTA. The final chapter explores early revenue body experience with addressing the risks and taking advantage of the opportunities presented by electronic payment systems in an underground economy context.