Vape Shops, Sweet Shops and the Slow Death of Paying Your Taxes

There's a particular sort of shop you'll recognise instantly on any British high street in 2026. The lighting is aggressive. The window display is three shelves of neon liquid and a life-sized Grinch. There is never anyone in it. It has been there for eleven months, pays roughly £40,000 a year in rent, sells maybe six things a day, and shows no sign whatsoever of going under.

Harry Wallop has written a nicely irritated piece pointing out what everyone walking past these places has quietly suspected for years: the modern high street's growth sector isn't retail at all. It's tax evasion. And the reason it flourishes is depressingly simple — the people running these outfits have worked out that the odds of anything bad happening to them are close to zero.

The numbers are worse than the vibes

This isn't just saloon-bar grumbling. The National Audit Office found that HMRC lost an estimated £5.5 billion to tax evasion in 2022-23, and that 81% of that came from small businesses, up from 66% just three years earlier. The NAO's verdict was brutal: HMRC didn't have a strategy for tackling evasion, hadn't bothered estimating which sectors were worst, and had barely touched the enforcement powers it was handed in 2022.

Two techniques dominate. The first is electronic sales suppression — software bolted onto the till that quietly deletes takings while leaving a plausible-looking paper trail. The second is phoenixism: run up debts, collapse the company, reopen next Tuesday under a new name with the same directors and the same Grinch. HMRC reckons phoenixism costs it over £500 million a year. Between 2018 and 2024, the Insolvency Service disqualified precisely seven directors for it.

Seven. Out of more than six thousand disqualifications. You are more likely to be struck by lightning than banned from company directorship for serial phoenixing.

Enforcement theatre, or the real thing?

To be fair, the government has finally noticed. There are now 350 new HMRC criminal investigators, roughly half of them pointed at what ministers have branded "high street harms", and the department has promised more than 30,000 interventions this year against vape shops, barbers, souvenir shops and convenience stores. There's a new Home Office High Street Organised Crime Unit with £30 million behind it. The National Crime Agency estimates around £1 billion of dirty money washes through these premises annually.

Good. Genuinely. But note the shape of the announcement: a minister in a hi-vis, a raid filmed for Instagram, a haul of 289 disposable vapes and — I'm not making this up — 173 squishy toys. It's enforcement as content. Meanwhile HMRC prosecutions have roughly halved since 2018, and prosecutions of the enablers who set these networks up have fallen by three-quarters in five years.

Who actually pays

The sociologically interesting bit isn't the criminality. It's the corrosion. Every one of these shops sits next to a bakery, a bookshop or a hardware store whose owner does file honest returns, does pay VAT, and is therefore competing against someone playing by different rules entirely. That's not a level playing field with a few cheats on it; it's a market that systematically rewards dishonesty.

And it teaches a lesson to everyone watching. Tax compliance is overwhelmingly normative — most people pay because they think most other people pay. Once a critical mass of high street traders visibly doesn't, and visibly gets away with it, the honest trader starts to feel less like a citizen and more like a mug.

Final thoughts

The vape shop isn't the disease, it's the symptom — of an enforcement system that spent a decade underfunded, uncurious and structurally incapable of following a company through its third rebirth. Raids and press releases are the easy part. Actually connecting Companies House to HMRC's systems is the hard part, and officials cheerfully admit that could take five to ten years.

In the meantime, the Grinch abides.