I think the government has given up with the small scale grey economy. The first £1000 of online sales doesn't even have to be declared, so some EBay sellers are earning a bit of pocket money tax free.
Income tax only makes up about 25% of the Treasury's income. Most of its income is from indirect taxes.
Until the 2019-2020 tax year I hadn't paid any income tax for three years - I'm in the UK perfectly legally, but I genuinely had earnings below the threshold for income tax.
Nevertheless, I paid plenty in indirect taxes. Most of my money goes on "essentials", such as my rent and utilities. I assume my landlord pays tax on my rent, Tesco pays tax on its business and its employees pay tax, as do the growers of the food I've bought and the people who produce any packaging. I pay council tax. Even if some immigrants aren't registered for council tax, their landlords will be and the amount will have been factored into their rent ... and so it goes on. Even people who don't pay income tax have to use goods and services which have been taxed at some stage.