HMRC collected £9.8 billion in extra revenue through tax investigations into the UK’s 2,000 largest businesses last year, up 12% from £8.7 billion in 2017/18, says Pinsent Masons, the international law firm.
The biggest element of this was £6billion from tax investigations into VAT and £2.6billion in underpaid Corporation Tax from the top 2,000 businesses.
Pinsent Masons explains that the sharp increase is being driven in part by HMRC’s focus on the underpayment of tax by major technology and financial services businesses.
Stuart Walsh, Partner at Pinsent Masons, said: “Bigger UK and foreign businesses are going to find themselves under continued scrutiny from HMRC over the next year.
“The new Government’s spending pledges mean HMRC and the Treasury will be under pressure to raise more money.
“The view is that big businesses are not being put off investing in the UK because of the tax environment so that gives HMRC scope to continue to push very hard wherever it sees the possibility of underpaid tax.”
According to the law form Pinsent Masons, VAT has been a particular area of focus for HMRC recently. Money generated from VAT investigations now makes up more than half (61%) of HMRC’s total take from investigations into large businesses, compared to 41% last year.
Whilst issues over underpaid VAT has caused well reported problems at a number of smaller UK listed companies, it has also led to major disputes at the other end of the spectrum for major multinationals. It was reported reported that HMRC is currently investigating one of the biggest “gig economy” businesses, Uber, with £1 billion in disputed VAT payments at stake.
Stuart Walsh added: “VAT is likely to remain a flashpoint for HMRC over the next few years. Given that there was a record level of VAT that HMRC believes it was underpaid last year.”