Why Are UK Tax Investigations Lasting So Long?

If you're under HMRC investigation, brace yourself — it might not be over any time soon. According to recent findings from Pinsent Masons, some investigations are now lasting up to three years and nine months on average.

For the UK’s largest businesses, many cases have remained open for over four years — putting serious financial and operational strain on the companies involved.

But what’s behind these extended timelines, and how can businesses prepare?

The Scope of the Problem: 2,000 Investigations and Counting

• Around 2,000 UK businesses fall under HMRC’s Large Business Service remit (annual turnover of £200m+).

• Currently, half are under investigation, equating to roughly 2,000 open cases.

• Many of these cases have exceeded the four-year mark, highlighting the systemic delays in closing long-running disputes.

Top Factors That Influence How Long an HMRC Investigation Lasts

Business Complexity

Larger businesses have intricate structures, international dealings, and multiple revenue streams — all of which require more thorough scrutiny from HMRC.

Scope of the Enquiry

A full-blown investigation (Code of Practice 8 or 9) takes significantly longer than a standard compliance check.

HMRC Resources and Internal Delays

Even with the government pledging more funding for additional tax officers, staff shortages and cautious internal procedures mean that more resources don’t necessarily equal faster resolutions.

Cooperation and Documentation

Delays in responding to HMRC queries or submitting full documentation can stretch the timeline even further. A proactive, transparent approach can sometimes accelerate progress.

Legal Complexity and Disputes

In cases involving complex legal arguments or international tax matters, HMRC is understandably slower to close the case, especially where litigation may be on the horizon.

The Financial Consequences of Delay

One of the most pressing issues for businesses is the late payment interest, which now stands at 8.5% as of 6 April — the highest since 2007. This means the longer your case drags on, the more it could cost you — even if you eventually settle in HMRC’s favour.

What Can You Do About It?

• Seek specialist representation early. Engaging expert tax advisers can help manage the investigation efficiently and minimise risk.

• Maintain excellent records. Well-organised documentation is a key factor in helping HMRC process your case faster.

• Communicate clearly and proactively. Avoiding delays in correspondence with HMRC is crucial.

• Stay informed. Understanding the process and your rights during an investigation helps you stay one step ahead.

Final Thoughts: Be Prepared, Not Surprised

If your business is facing or expecting an HMRC investigation, time is money — literally. With average durations creeping close to four years, it's more important than ever to understand the process, anticipate the delays, and seek expert guidance.

The cost of waiting can be more than just financial — it could affect your cash flow, strategy, and peace of mind!

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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