The UK’s HM Revenue & Customs (HMRC) has sharply increased its enforcement activity around value-added tax (VAT), with investigations into medium and large businesses increasing by nearly a third last year, the Financial Times reported.
The publication cited HMRC data obtained through a freedom of information (FoI) request showing that VAT enquiries into larger companies rose to 11,894 in the year to March 2025.
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The figure marks a 31% rise from 9,071 a year earlier.
The number of VAT checks across all taxpayers – including smaller companies and individuals –also increased from 103,790 to 110,300 over the same period.
The increase comes as the government has made closing the “tax gap” a priority for HMRC.
For 2023–24, the overall tax shortfall was put at 5.3% of liabilities, or £46.8bn, based on HMRC’s latest full-year estimates.
While that aggregate figure has remained broadly unchanged, the portion attributed to VAT is estimated to have grown, reaching £11.9bn in 2024–25 against £8.9bn the year before.
HMRC raised £5.3bn in additional VAT from completed probes into the UK’s biggest businesses, averaging around £8.6m per concluded case.
Tax professionals note that VAT rules have become increasingly intricate for companies to navigate, particularly in relation to food and drink products.
Separate FoI disclosures indicate that more companies are now being penalised for paying VAT late, following reforms to HMRC’s penalty framework.
In the 12 months to 31 July 2025, 582,000 penalties were imposed for late VAT payments, up from 569,000 in the previous year.
The data shows that total late-payment penalties rose to £302m, from £294m a year earlier. To support its compliance push, the government plans to add 5,500 staff in compliance roles at HMRC, alongside 2,400 additional personnel in debt management.
