Record high £9.8bn collected by HMRC through investigations into UK’s biggest businesses last year

28 Oct 2019 | 03:38 pm | 3 min. read

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 (source HMRC), says Pinsent Masons, the international law firm.

The biggest element of this was £6billion in 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, comments: “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.”

Pinsent Masons says that 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 (Source: HMRC).

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. For example, it has been reported that HMRC is currently investigating one of the biggest “gig economy” businesses with £1 billion in disputed VAT payments at stake.

HMRC is also targeting financial services businesses as large parts of those businesses are not covered by the normal exemption from VAT for financial service. For example, M&A advice, portfolio management and some investment advice and research are taxable. As of April, VAT exemption rules were changed such that insurers were no longer permitted to treat pension fund management services as exempt.

HMRC also suspects large businesses of not paying enough tax due to ‘place of supply’ issues. This is when HMRC believes a business has incorrectly identified where a service was supplied, and therefore may not have paid the correct VAT due. For example, if a business wrongly reported their services were supplied outside the UK when actually it was supplied in the UK then that would create a VAT shortfall

Pinsent Masons adds that underpayment of VAT has become such a considerable issue that HMRC estimates that 9.1% (£12.5 billion) of all VAT due is unpaid – up from 8.5% and 7.4% the two previous years (Source: HMRC).

Stuart Walsh continues: “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.”

Latest press releases

Show me all press releases

Pinsent Masons advises KATEK SE on IPO in Germany

Multinational law firm Pinsent Masons advised KATEK SE and Hauck & Aufhäuser Privatbankiers AG on KATEK SE's initial public offering (IPO) on the regulated market (Prime Standard) of the Frankfurt Stock Exchange.

Pinsent Masons advises on pioneering West Midlands Combined Authority 'Help to Own' home ownership scheme

Multinational law firm Pinsent Masons has advised City of Wolverhampton Council, The West Midlands Combined Authority (WMCA) and Frontier Development Capital Ltd (FDC), on the establishment of an innovative housing scheme designed to help people struggling to get on the property ladder, including Covid-19 key workers.

Pinsent Masons enhances Madrid offering with appointment of employment partner Samuel Gonzalez

Multinational law firm Pinsent Masons has widened its offering in Madrid through the appointment of employment partner Samuel Gonzalez, who will develop and lead the employment law team there.

People who viewed this press release also viewed

Show me all press releases

Pinsent Masons launches Equality Law practice

Multinational law firm Pinsent Masons has announced a unique equality law specialism that supports clients in managing the cultural and legal aspects of discrimination and inclusion issues.

Pinsent Masons advises Sanne Group on first specialised depositary services licence in Ireland

Multinational law firm Pinsent Masons has advised global fund administrator Sanne Group on the first specialised depositary licence to be granted by the Central Bank of Ireland, further enhancing Sanne’s capabilities in Ireland and its multi-jurisdictional proposition for alternative fund managers.

Pinsent Masons advises on new £15m social investment 'Resonance Everyone In' homelessness property fund

Multinational law firm Pinsent Masons has advised on a new £15m homelessness social investment property fund to help meet increasing demand to house rough sleepers in London.

For all media enquiries, including arranging an interview with one of our spokespeople, please contact the press office on

+44 (0)20 7418 8199 or 

Location contacts