Re: It is not just lost VAT ...
I think that HMRC don't start asking questions until you're earning something undeclared over £4k a year, minimum.
Even then, you can "get away" with things for a lot time, but you would be an idiot to try to do so via Amazon or eBay, etc. In a cash-business, yes, you can get away with a lot. Ask London cabbies about the back-handers from strip-clubs, as exposed on the news not long ago. Up to £80 cash-in-hand for a dropoff in some cases, the second the customer enters their premises.
But with something like Amazon or eBay, where you need a bank account? They'll get you eventually but they'll wait until you've run up a bill worth chasing you for.