The Inland Revenue must do more to tackle tax fraud, parliament's spending watchdog has warned.

A report by the National Audit Office has found the Inland Revenue faces real threats of fraud and needs "a clear view of the resources and approaches" to tackle them.

The watchdog called on its inspectors to step up the number of prosecutions and make greater use of the new offence of evading income tax.

The report also said the taxman should mount more publicity campaigns to change public attitudes to fraud and heighten the fear of detection.