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HMRC investigations into large UK businesses hit five-year low

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The number of large UK businesses under investigation by HMRC for potential tax underpayment has dropped to a five-year low, with only 790 companies investigated in 2022-23. This significant decline has prompted questions about HMRC’s strategy and resource allocation in enforcing tax compliance among the UK’s largest corporations.

Decline in investigations amid resource constraints

Historically, HMRC has investigated about half of Britain’s 2,000 largest companies at any given time. However, recent data shows a steady decline in these probes, with 820 companies investigated in 2021-22, down from nearly 1,000 in 2018-19.

Several factors have contributed to this decline. The COVID-19 pandemic temporarily paused some investigations as HMRC redirected resources to more urgent issues. Additionally, ongoing resource constraints and a shortage of skilled investigators have compounded the challenge, especially given the complexity of large business tax cases.

Despite these challenges, HMRC has prioritised high-value cases to boost tax recovery. This targeted approach, aided by technology, helps HMRC maximise the impact of its limited resources, even with fewer investigations. Businesses can maintain compliance by using tools like HMRC approved payroll software, which ensures accurate and timely tax reporting.

Increased compliance yields

Despite the decline in investigations, HMRC has seen a significant rise in compliance yields—the tax revenue recovered due to compliance efforts. In 2023-24, the yield increased by £1.6 billion compared to 2018-19, reaching £11.4 billion. This growth highlights HMRC’s focus on high-value cases with substantial tax recovery potential.

Tax experts generally agree with HMRC’s reasoning for the decline in investigations, acknowledging that the agency is using its resources more effectively. Additionally, investigations are being completed faster, with the average inquiry now taking 21 months, down from 36 months the previous year.

Future outlook and legislative impact

Looking ahead, analysts anticipate an increase in investigations during the current parliament, especially with the Labour Party’s plan to invest an additional £855 million annually into HMRC to tackle tax avoidance. 

The “notification of uncertain tax treatments” law, introduced in April 2022, is expected to impact future investigations by requiring large businesses to inform HMRC of uncertain tax positions. This enables HMRC to better target its efforts, aiming to further reduce the legal interpretation tax gap, which has already decreased from £6 billion in 2019-20 to £4 billion in 2022-23.

Conclusion

Despite the decrease in the number of investigations, HMRC’s refined approach has proven effective in increasing tax compliance among large UK businesses. With additional funding and new legislation in place, the agency is poised to continue improving its oversight and ensuring that large businesses pay their fair share of taxes.

Business

Deposit Return Scheme diversion ‘illogical’ says Pembrokeshire brewery 

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TENBY HARBOUR BREWERY and local Senedd Member Samuel Kurtz have urged the Welsh Government to reconsider its decision to withdraw from a UK-wide Deposit Return Scheme (DRS) due to its insistence on including glass.

Earlier this week, Climate Change Secretary Huw Irranca-Davies announced that the Welsh Government would no longer participate in the development of a UK-wide DRS, citing issues arising from the UK Internal Market Act 2020. This decision is believed to be influenced by the Welsh Government’s plan to include glass in its scheme—a factor that contributed to the collapse of Scotland’s DRS in 2023.

The move has been met with frustration and anger from numerous organisations, who argue that this divergence will increase costs for Welsh producers and consumers.

Commenting on the matter, Samuel Kurtz said: “This decision is deeply frustrating, and to diverge from a UK-wide scheme shows that it is not one made with the best interests of Welsh consumers and producers at its core.

“The UK market is so interlinked that any decision which places Welsh businesses at a competitive disadvantage should not proceed. These calls from a range of industry and business representatives have been ignored by the Welsh Government.

“For the sake of our businesses and consumers, I urge the Welsh Government to reconsider its decision, align itself with the UK-wide scheme, and provide proper support to Welsh businesses.”

Industries, especially the micro-brewery sector, would be especially hit hard in Wales by the Welsh Governments choice.

Speaking following this announcement, Richard Johnson, Head Brewer at Tenby Harbour Brewery said:

“The brewing industry has had to tread a path through covid lockdowns, energy price increases, a cost of living crisis and rising wage and national insurance bills, making it increasingly difficult for brewers get good returns and re-invest in their businesses.

“Wales is a recycling nation, so a blunt ‘one size fits all’ approach creates additional logistical and financial burdens on the smallest producers, when the very largest producers are generating the majority of the recycling demand.

“It also seems illogical to diverge away from a UK wide scheme which will put Welsh brewers and drinks producers at a disadvantage.

“The UK and Wales has a proud brewing heritage, but adding in measures such as DRS to small brewers means that their time and money are directed to these activities, instead of using their time for innovation and R&D, of which the UK brewing scene is known and revered for.” 

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Business

Bluestone crowned ‘Best Small Company for UK Parks and Lodge Holidays’

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BLUESTONE is celebrating a major win after being named the Best Small Company for UK Parks and Lodges Holidays at the prestigious British Travel Awards 2024.

The announcement was made at the prestigious awards ceremony this week, marking yet another significant achievement for the popular West Wales destination.

This award recognises Bluestone’s commitment to providing exceptional family holiday experiences at its 500-acre resort in the stunning Pembrokeshire Coast National Park.

“We are absolutely thrilled to receive this award,” said Bethan Rees, Head of Marketing at Bluestone. “It’s a testament to the hard work and dedication of our entire team, who create magical and memorable experiences for families all year round. We are incredibly grateful to every single one of our guests who voted for us and who choose to visit us year on year.

“When you look at the array of other finalists, the award demonstrates why we’re so proud of winning it. This is due to our continued investment, team, and commitment to environmentally sustainable tourism.”

This award builds on Bluestone’s impressive track record. It has consistently received high praise for its family-friendly facilities, commitment to sustainability, and dedication to providing outstanding customer service. Earlier this year, Bluestone was again recognised by Which? as one of the UK’s top holiday destinations and the best rated in Wales.

The British Travel Awards are the largest consumer-voted awards programme in the UK. Winning this award highlights Bluestone’s position as a leader in the family holiday market and reinforces its reputation as a top choice for unforgettable family getaways.

Bluestone, which employs over 800 people and is one of the largest employers in West Wales, is also committed to investing in its people and local community. It provides extensive training and development through its People Services team and the Bluestone Academy. In addition, it supports a wide range of local projects and initiatives through the Bluestone Foundation.

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Business

Ascona CEO honoured at 2024 Allica Bank Great British Entrepreneur Awards

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ASCONA GROUP, the seventh-largest independent forecourt operator in the UK and one of Wales’ fastest-growing companies for the past three years, has achieved a significant milestone. Darren Briggs, CEO and founder, has been recognised at the 2024 Allica Bank Great British Entrepreneur Awards, securing wins in two prestigious categories: ‘Scale-Up Entrepreneur of the Year – Wales’ and the inaugural ‘Randall Foundation Entrepreneur of the Year – Wales.’

Celebrating its 12th anniversary, the Great British Entrepreneur Awards highlight innovators and trailblazers shaping the UK economy. The newly introduced ‘Randall Foundation Entrepreneur of the Year’ award celebrates business leaders whose ventures align with the foundation’s mission to save lives, improve life chances, and positively impact local communities.

Pembrokeshire-based Ascona’s commitment to community support has been a cornerstone of its success. The company established The Ascona Foundation in 2020 and has since donated over £400,000 to local, national, and community organisations.

Reflecting on the achievement, Darren Briggs said:
“It is a great honour to be recognised with such prestigious awards at this year’s Great British Entrepreneur Awards.

“I am incredibly proud of Ascona and everything we have achieved over the years. This is another milestone for our business and a testament to the hard work, commitment, and ethos of ‘Team Ascona.’

“However, I am most proud of our charitable endeavours and the team’s dedication to giving back. This year, we remain committed to our fundraising efforts, including our partnership with Wales Air Ambulance, as we continue to support the communities we serve.”

Since its founding, Ascona Group has focused on driving innovation in the forecourt sector while fostering community engagement. This dual commitment to growth and giving back has positioned the company as a leader in its field.

Ascona’s charitable initiatives have supported various causes, enhancing lives across Wales and beyond. Through partnerships with organisations such as Wales Air Ambulance, the Group continues to make a tangible difference.

Darren Briggs’ recognition at the awards underscores Ascona’s impact on both the business world and the communities it serves.

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