Businesses are waiting up to eight years for HMRC to complete their tax investigations, MPs have warned.
The public accounts committee (PAC) has said cases are dragging on for too long, with investigations involving a court dispute now taking nearly twice as long as in 2019.
The PAC urged HMRC to set out plans to slash the time taken, as concerns grow about the lengthy process.
Multinational companies fighting HMRC through the courts had to wait eight years and one month on average for their investigations to be resolved, up from four years and nine months in 2019-20, the report said.
“This is far too long,” the PAC said. “The complexity of the tax system does not help, nor does the large amount of information that HMRC requests from the large businesses it investigates.
“The compliance burden will likely increase for the largest multinationals … HMRC needs to reduce compliance burdens elsewhere, including through using technology more effectively and tackling complexity in the tax system.”
Because progress is partly reliant on Britain’s creaking court system, the MPs acknowledged that HMRC had less influence over how long tax investigations that go to litigation could take.
However, it said even cases that did not involve legal action took on average 17 months to conclude in 2025.
This is down from the high of 35 months for cases completed in 2021-22, which came after Covid, but represents only a slight reduction from 2019-20 levels.
The findings come as part of a major report from the PAC into tax compliance of multinationals who operate in the UK.
The influential committee, led by Sir Geoffrey Clifton-Brown, the Tory MP, warned that the public were being left in the dark about whether HMRC was settling large tax disputes fairly and consistently.
A lack of information on these investigations risked adding to the public’s perception that multinationals played by different rules compared with other taxpayers, the PAC said.
Britain also remained exposed to the risk that large multinationals divert profits across borders, the committee added.
It had been hoped that the roll out of a new global minimum corporation tax rate would address challenges with companies moving profits overseas to reduce their tax bill.
However, Clive Betts MP, the deputy chair of the PAC, warned: “The UK still risks bleeding a significant amount of its tax take overseas through the cross-border diversion of multinationals’ profits over borders.
“HMRC should be bearing down on work to understand how companies are complying with new rules on international minimum rates for corporation tax.”
Despite the global minimum corporation tax rate, the scale of shifting profits across borders remains vast, according to the committee.
Last year, an estimated £21bn of tax under examination as part of HMRC investigations into large businesses was related to international risks, including moving profits abroad.
The MPs urged HMRC to provide more detail on the scale and nature of international tax risks and how Britain could crack down on the issue.
An HMRC spokesman said:“The UK continues to lead the way internationally in making sure that multinational businesses pay the tax that’s legally due.
“Our approach is delivering real results, bringing in additional tax £14.9bn in tax last year by effectively applying the tax rules to large businesses.”
