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late in the evening refers to a specific time of day - one that is very late within the range of time referred to as 'evening'.

(1) "I work in the afternoon and late in the evening"

There are certainly cases where the meaning of the two overlap. For example, you can also say:

(2) "I work in the afternoon and later in the evening"

But later is comparative in nature, so this implies the time is relatively late (compared to what is typical). The comparative nature can manifest itself in other ways. For example, you can use it like this when telling a story:

(3) "After work, I went to the store. Later in the evening, I visited my friend."

You couldn't say this with late in the evening since it doesn't have the necessary comparative component (establishing the time the speaker went to the store as a point of reference).