Individuals and small firms shouldn’t assume they’re a lower priority to HMRC just because its highest investigative return per pound now comes from big business, a tax expert has said.
Christian Hickmott of Integro Accounting was speaking after new data from Pinsent Masons (PM), a law firm, indicated HMRC now brings in about £35 for every £1 that it spends on tax investigations.
With the actual figure of £34.70 constituting a 13% increase on 2023-24, Hickmott says the stats send a clear message to all: ‘get your tax affairs right first time and keep good records.’
Crunching the numbers yesterday (Sep 14th 2026), with exclusive input from three ex-tax inspectors, Integro’s MD also said HMRC’s compliance investment was, on its face, “delivering results.”
At a glance:
- HMRC’s tax investigations generate £34.70 for every £1 spent (2024-25), up 13% (2023-24) from £30.80, according to Pinsent Masons — with large business investigations delivering the highest yield at £95.50 per £1 (up 33%), against just £14.59 for individuals and small firms.
- Integro Accounting: owner-managed firm yield is still up over 20% in a year, so small traders — responsible for 62% of UK tax leakage — shouldn’t assume they’re not an investigative priority to HMRC.
- Jesminara Rahman (ex-HMRC) of Tax Resolute told Integro compliance yield has more components than investigative yield, and ‘£35 recovered per £1 spent’ isn’t quite right, since yield is calculated only against staff costs, not HMRC’s other costs.
- Carolyn Walsh (ex-HMRC) of Oblako Ltd told Integro that small firms are still HMRC’s biggest fishing “pond,” but cheap automated ‘catches’ like MTD and Connect are funding HMRC’s hunt for “bigger fish.”
- Helen Pearson (ex-HMRC), a Brabners tax litigation specialist, told Integro the yield bakes in an estimated “deterrent effect,” so whether that revenue is ever collected is still an open question — unlike HMRC’s AI use, which is increasingly being used by tax officials in 2026-27 where tax or policy stakes are high.
- Integro’s Christian Hickmott predicts technology and data analysis will play a greater role when HMRC reviews individuals and small businesses in 2027-28, and wants to take a closer look.
How much more does HMRC make from investigating big businesses?
When measured against staff costs, HMRC’s yield from investigating big businesses rose by the greatest margin in the data — up 33% to £95.50 for every £1 spent, compared to £71.70 previously.
That makes the UK’s large firms the single biggest return on HMRC’s investigation investments, dwarfing the yield per £1 it spends probing individuals and small firms — a mere £14.59, PM found.
Why can’t small firms get complacent about HMRC’s radar?
But small traders can’t get complacent, warns Carolyn Walsh, who was an HMRC inspector for eight years, because not being HMRC’s most lucrative target doesn’t mean being off its radar, she hinted.
“Contractor companies and other small firms must remember that the biggest pond in which to fish for HMRC is still the small business sector, as it accounts for 62% of tax losses,” Walsh told Integro.
“Don’t get caught up on not as much being on the ‘end of the hook,’ versus big biz, when HMRC reels in its investigators. Keep in mind, £14.59 from small traders is still up from £12 a year before.”
What’s Integro’s message to one-person companies?
A specialist in contractor taxation since 2010, Integro Accounting’s boss Mr Hickmott confirmed: “The Revenue’s yield from probing owner-managers is up by more than 20% in a single tax year.
“[So despite big companies representing the greatest investigative yield for HMRC]… a reminder to one-person firms might now be useful so that they don’t get the wrong idea. And here’s the reminder:
“Ultimately, the value of getting tax affairs right, first time, and keeping good records, as well as seeking early advice from a trusted accountant, remains the key to avoiding costly HMRC disputes.”
The PM stats don’t show how many of the investigated parties had an adviser, pointed out Hickmott, nor do they distinguish between deliberate non-compliance and disputes over complex tax rules.
Is HMRC’s £34.70 yield figure the full picture?
Jesminara Rahman, who worked at HMRC for 15 years as an inspector and compliance tax manager, signalled that investigation yield probably isn’t the most comprehensive yardstick.
“HMRC’s definition of compliance yield is much wider,” Rahman, author of the soon-to-be-launched book, A Guide to Alternate Dispute Resolution in the UK, told Integro Accounting.
What’s in HMRC’s compliance yield?
“Compliance yield,” explained former HMRC official Ms Rahman, “includes:
- Additional tax identified through compliance interventions
- Revenue losses prevented
- Estimated future revenue from changes in taxpayer behaviour
- Downstream yield
- Upstream yield, which includes estimated revenue from measures designed to prevent non-compliance before it occurs.”
Does the ROI account for HMRC’s full running costs?
The boss of Tax Resolute, which assists taxpayers with HMRC disputes, Rahman said there was another important distinction when considering the return on tax investigation investments.
“The returns quoted in the [Pinsent Masons data] are calculated against staff costs. They do not necessarily represent the return against the full cost of undertaking HMRC’s compliance activity.
“The figures therefore demonstrate the significant value of HMRC’s compliance work — but they should not be read as showing that £34.70 in additional tax is actually collected for every £1 spent.”
How much has MTD cost HMRC to build?
Making Tax Digital for VAT was originally budgeted at £226million at Budget 2016, for example — and its cost has since ballooned by 400% to £1.3billion.
The PM data also doesn’t factor in HMRC’s £482m injection on new digital systems and legacy system upgrades or the £785m HMRC spent on keeping its digital systems running (in 2023-24).
Has HMRC’s investment in tech systems like Connect paid off?
However, Ms Walsh, who worked in the Revenue’s National Insurance compliance unit, says HMRC will feel its tech systems — including Connect — have earned their keep.
The ex-tax officer told Integro Accounting: “According to my calculations, the Pinsent Masons stats show HMRC has got its act together and is working more efficiently.
“Why? Well, structural policy changes and error-prevention measures are said to account for over 40% of HMRC’s total compliance yield, which is probably a more informative measure.
“HMRC achieved this near half of its compliance yield through mandating paid-for software that eliminates basic entry errors and feeds data directly into HMRC’s automated Connect system.
“So MTD flags inconsistent data and prompts self-correction at minimal cost to HMRC. Meanwhile, MTD itself… generates a great amount of revenue without expensive manual investigations.
“In short, the cheapest digitally driven and automated methods of increasing revenue for HMRC allow more complex or criminally organised tax losses to be tackled, albeit at an initial greater cost.
“The key point is that the increase in tax revenue generated for HMRC through MTD and its other automated systems — at minimal cost to HMRC — is effectively funding its capture of bigger fish; those large businesses returning an impressive £95.50 per single pound.”
Could automation free up HMRC for more targeted investigations?
With automated systems doing revenue collection work ‘in the background,’ Integro’s Christian Hickmott says HMRC could be freed up to carry out more ‘on the ground’ business taxpayer probes.
Hickmott, who founded the contractor accountancy firm in 2013, continued his assessment:
“As HMRC increasingly, manually, focuses on more technical aspects of the tax system…professional advice can help taxpayers understand their obligations, navigate uncertainty and respond effectively if questions are raised.”
Is hiring a tax expert still cost-effective for small businesses?
The managing director of Oblako Ltd, Carolyn Walsh says an experienced accountant is indeed still worth the investment for the typical taxpayer in 2026-27.
“For the average taxpayer who is expected to self-manage, even if they have AI tools to hand to answer basic accounting questions, is engaging a tax expert cost-effective? I would still say ‘yes.’
“Bottom line? The time that a small trader might spend dealing with MTD, or an HMRC nudge letter, would be more wisely spent on their own commercial venture, generating the very income that can pay for an expert to take care of these potentially troublesome tax compliance set pieces. Also, the peace of mind of having an accounting or tax expert in your corner as a small company cannot be underestimated — it’s finding the right one which is the difficult bit.”
What does HMRC say about its own investigation yield?
Nick Glover, a senior communications leader at HMRC, welcomed the UK tax office now bringing in almost £35 for every tax investigation pound it spends.
“Our use of AI and advanced analytics tools was crucial to preventing the loss of £10bn in tax in 2025/26 — supporting a record overall compliance yield of £50.2bn last year,” HMRC’s Mr Glover said in a social media post.
“This is tax that would have otherwise gone unpaid without the department’s intervention. We’ve recruited 2,100 additional compliance officers since recruitment started in 2025, putting us ahead of schedule in recruiting 5,500 officers between 2025 and 2030. And last year, HMRC opened almost 500 criminal investigations — an increase of more than 10% compared to 2024/25.”
How is HMRC using AI?
Speaking to Integro Accounting, tax litigation specialist Helen Pearson, senior associate at Brabners, confirmed that Artificial Intelligence is bolstering the taxman’s haul.
“Supported by its use of AI and data analytics, we are seeing that HMRC are increasingly investigating complex tax risks, particularly where the amount of tax at stake is higher or where there is a clear policy objective.
“Typically, this means increased scrutiny on larger corporates and high-net-worth individuals.”
How much does HMRC make from investigating wealthy individuals?
According to the Pinsent Masons data, HMRC’s yield from probing the wealthy and mid-sized firms came in at £38.70 for every £1 spent — a four per cent reduction, but still representing the second largest take-home for the taxman per customer group.
Pearson, who like Walsh and Rahman is ex-Revenue, but who is also a former tax solicitor for PwC and EY, told Integro Accounting: “It is important to recognise that the overall [HMRC] yield figures…[relating to investigations] are not the same as the cash actually collected.
“It also includes an amount for a ‘deterrent’ effect — essentially an estimated amount of ‘future yield’ based on the expected changes in taxpayers’ behaviour as a result of all of HMRC’s compliance activity.
“Whether this amount of tax will actually be received by HMRC, and whether it will close the tax gap — in particular for smaller businesses or individuals — are questions that are still to be answered.”
Integro Accounting: tech and data analysis will help HMRC take a closer look in 2027-28
Last night (Sep 14th 2026) Integro’s Christian Hickmott reflected: “It’s true that the headline yield figures from HMRC’s investigations for 2024-25 should be viewed in context. But it’s also true that technology and data analysis will invariably play a greater role for HMRC in 2027-28, commencing on April 6th 2027, when it inspects an individual or small business — and wants to identify areas for closer review.”
