Tax investigations lasting an average of 45 months

Tax investigations lasting an average of 45 months

HMRC tax investigations are running on for as long as three years and nine months on average which is putting a significant burden on businesses with reports showing that at any given time it is predicted that half of the UK’s biggest businesses are under investigation by HMRC, and these investigations are taking an average of 45 months to conclude.

There are approximately 2,000 businesses that fall under HMRC’s Large Business Service scope in the UK, and it is believed that HMRC has close to 2,000 open cases looking into the affairs of these. Additionally, it is thought that many of these have been open for more than four years and HMRC are being encouraged to be more rigorous in closing long running cases down. Having cases running for three, four or five years should be the exception rather than the average.

The government has pledged additional funding to HMRC to recruit more tax officers, aiming to improve tax collection and reduce unpaid liabilities. However, there are concerns over whether increasing resources will actually lead to faster resolutions, given HMRC’s internal delays and cautiousness about closing cases.

Also, with the recent increase to the interest rate for late payments to 8.5% on 6 April 2025, means the longer these disputes go on for the bigger the bill will be for the business when it comes to settling, if they have additional payments to make. This is the highest this interest rate has been since December 2007.

These large businesses are defined as having an annual turnover of £200m or more, but smaller businesses are also increasingly being investigated and this trend is likely to continue.