HMRC CRACKDOWN ON BIG BUSINESS TAX AVOIDANCE PAYING OFF, REPORT SUGGESTS
The taxman collected an extra £9.8 billion through investigations into the UK's biggest 2,000 companies last year, according to new research.
The figure was up 12% on the £8.7 billion collected through investigations a year earlier.
Law firm Pinsent Masons found that HM Revenue and Customs (HMRC) raked in the cash by targeting major tech and finance businesses - sectors that have faced heavy criticism over tax avoidance.
Investigations focusing on companies that underpaid corporation tax helped bring in £2.6 billion and £6 billion came from tax investigations into non-payment of VAT, with the remainder from other probes.
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."
VAT underpayments have also come under scrutiny by HMRC - with an investigation launched into Uber earlier this year that could cost it up to £1 billion.
The ride-hailing platform does not pay VAT on fares, arguing it is just a middleman, but said in its recently published accounts "the Uber Group is involved in an ongoing dialog with HMRC, which is seeking to classify the Uber Group as a transportation provider. Being classified as a transportation provider would result in a VAT (20%) on Gross Bookings or on the service fee that the Company charges Drivers, both retroactively and prospectively".
HMRC is also targeting financial services businesses as large parts of the sector are not covered by the normal exemption from VAT.
M&A advice, portfolio management and some investment advice and research are all taxable, and as of April VAT exemption rules were changed, meaning insurers are no longer allowed to treat pension fund management services as exempt.
Pinsent Masons said underpayment of VAT has become such a considerable issue that HMRC estimates 9.1% - around £12.5 billion - of all VAT due is unpaid.
This is up from 8.5% and 7.4% in the two previous years, the law firm added.
Published: by Radio NewsHub