It was reported on 15 January 2018 that recent figures from HMRC indicated an increase in the length of time taken to conduct tax investigations of large companies in the UK. In the year to 31 March 2017 the average length of time for investigations into large companies was 34 months, up from 31 months in the previous year. This reflects the strengthened approach by HMRC to tax avoidance by large corporates and an unwillingness by HMRC to “make deals” with companies. The result can however be increased compliance costs and tax uncertainty for large companies.

Investigations of the 2,100 largest and most complex companies are undertaken by HMRC’s Large Business Directorate. The average length of time required for a tax investigation has increased even though the number of cases open at the end of the year has fallen. The number of open cases fell to 3.617 at 31 March 2017, down from 3,875 a year earlier. This might indicate that the increase in time taken is not related to an increase in workload. One possible explanation is that a lack of resources is slowing the approach to investigations. At the same time as strengthening investigations HMRC is also carrying out a project to cut costs and modernize services, for example through Making Tax Digital (MTD), while facing challenges such a preparations for Brexit.

HMRC has indicated that last year it secured or protected additional revenue of more than GBP 8 billion from the largest UK companies. The companies are given exceptional scrutiny and at any time there will be active investigations involving more than half those companies. HMRC notes that the tax affairs of the largest companies are very complex, involving cross-border issues, and this means that the investigations require time.