£3.5bn year-on-year fall in cash collected from HMRC tax probes targeted at large businesses

The amount of cash collected by HM Revenue & Customs (HMRC) from its investigations into large businesses and corporations has fallen by £3.5billion year-on-year, according to a new report.

The data, put together and analysed by a leading UK law firm, suggests that the Revenue collected an additional £2.6bn from Britain’s largest businesses in 2016, down from a much higher £6.1bn recorded in 2015.

Commentators suggest that the fall in additional revenue could be attributed to a ‘lower risk’ approach to tax planning and strategy undertaken by numerous large corporations in recent years, particularly in the wake of the Panama Papers and LuxLeaks scandals.

However, a recent Freedom of Information request has revealed that the Revenue’s compliance teams are increasingly shifting their focus towards scrutinising the tax affairs of small and medium-sized enterprises (SMEs) as opposed to larger firms.

HMRC itself has previously said that it estimates that SMEs account for more than half (51 per cent) of the UK’s tax gap, whereas it believes larger businesses represent just 25 per cent in comparison.