HM Revenue & Customs (HMRC) collected an extra £3.75bn from small and medium-sized enterprises (SMEs) last year as a result of investigations into the underpayment of VAT, a 12 per cent increase on the previous year.
The additional money gathered by the taxman through VAT investigations accounted for half of all revenue collected through investigations into SMEs in 2017 to 2018, according to tax experts PfP.
In 2016 to 2017, the latest year for which data is available, HMRC stated that it believed firms underpaid £11.7bn in VAT, representing a 10 per cent increase from the £10.6bn the year before.
PfP highlighted that HMRC has become more adept at reacting to any potential underpayment by businesses, with VAT receipts hitting a record high of £125bn last year, a 60 per cent rise on the £78bn figure posted a decade ago. According to the data, VAT now represents over a fifth of total tax receipts.
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