HMRC's latest figures show that the UK tax gap has risen to an estimated £59.2 billion for the 2024/25 tax year. In plain English, that is the difference between the tax HMRC expected to collect and the amount it actually received.
For business owners, the important point is not just the size of the figure. It is where HMRC is likely to focus next.
Small businesses accounted for 62% of the tax gap in 2024/25, making them the largest customer group in HMRC's latest estimates.
That does not mean most small businesses are doing anything wrong deliberately. In many cases, tax issues arise because of errors, misunderstanding, pressure on time, changing rules or simply not having the right support at the right moment.
But it does mean HMRC is under pressure to look more closely.
An HMRC enquiry can happen even when you have tried to get things right
One of the most difficult things about an HMRC investigation is that it can come as a surprise.
HMRC has the power to investigate your business and financial affairs, and selection for an enquiry can sometimes be random. An investigation can be disruptive, intrusive and expensive. It can also take a long time, in some cases lasting a year or more, which can lead to rising professional costs.
That is why fee protection is worth serious consideration.
It is not about expecting a problem. It is about making sure that, if HMRC does ask questions, you have the right specialists by your side without worrying about how quickly the costs could build.
Protecting your business starts with planning ahead
No business owner wants to receive a letter from HMRC. But if it happens, the right preparation can make a difficult situation much easier to manage.
Fee protection gives you the confidence that professional support is available when you need it most. It helps you deal with HMRC enquiries properly, without the added worry of escalating adviser fees.
The tax gap figures are a clear reminder that HMRC scrutiny is not going away. For small and owner-managed businesses, now is a sensible time to review whether you have the right protection in place.
If you would like to understand how our Tax Investigation Service works, please contact McEwan Wallace. We will explain your options clearly and help you decide the right next step for you and your business.