HMRC is actively investigating 791 of the UK’s largest companies for suspected tax evasion, a figure that represents nearly 40% of the country’s largest businesses.
These investigations span vital sectors such as banking, telecoms, pharmaceuticals, retail and oil and gas, underscoring HMRC’s increasing focus on ensuring tax compliance among major companies, according to a study by Thomson Reuters.
Ray Grove, Head of Tax and Trade at Thomson Reuters, highlighted the growing importance of tax compliance in the current economic climate: “The scale of HMRC investigations into large companies shows the growing importance of tax compliance. Slow global growth means that many countries, including the UK, are looking to conduct tax investigations into large companies to help plug gaps in their finances. This means more intense scrutiny from tax authorities and the potential for more penalties.”
The banking sector is particularly in focus, with around 70 banks suspected of having underpaid £9.3bn in tax by 31 March 2024. This suggests that each bank could be underpaying tax by an average of £132.5m. The retail and oil and gas sectors are also being closely scrutinised, with HMRC estimating unpaid tax at around £5.5bn and £3.9bn respectively. For retail, this translates to an average of over £50m per company, while for oil and gas companies the figure is £64.9m per company.
The focus on the banking sector is particularly noteworthy, as the sector’s tax liabilities have risen sharply, with the total value of tax under investigation rising from £6.1bn in 2018/19 to £9.3bn in 2023/24. Banks often face complex tax challenges, particularly due to their reliance on third-party providers for IT and other back-office functions, which are often based in different tax jurisdictions.
Grove also highlighted the increasing pressure on tax departments: “With increasing complexity in reporting and compliance standards, CFOs are increasingly looking to tax leaders for strategic and operational advice. Companies must meet this increasing pressure by investing in the right talent and technology in their tax departments to ensure they remain compliant and strategic in today’s rapidly evolving tax landscape.”
To address these challenges, Thomson Reuters has introduced innovative solutions like Checkpoint Edge with CoCounsel, an AI assistant designed to simplify tax research. CoCounsel enables tax professionals to quickly navigate complex queries through a secure AI chat interface, drawing on massive databases of trusted Thomson Reuters content. This technology enables even entry-level professionals to efficiently conduct high-quality research, reducing reliance on the expertise of senior colleagues and helping firms stay ahead of the compliance game.
The intense scrutiny from HMRC is a stark reminder to major businesses across all sectors: tax compliance is no longer just a legal obligation but a crucial element of strategic planning and risk management.