Tax investigation insurance provider PfP has said that the UK automotive industry recorded the biggest increase in underpaid tax. 

According to the UK government’s HMRC, tax avoidance by the automotive industry has jumped by 143% last year to £444.2m.

The firm said that the rise in incidents of tax avoidance would mean that the industry could face an increase in tax investigation over the next year. 

Other industries that could witness a rise in tax investigations include the oil & gas industry, which has recorded an 11% increase in underpaid tax to £2bn this year, according to HMRC.

Areas that will be under scrutiny for underpaid tax in the automotive and oil & gas industry will include the tax treatment of self-employed contractors, who according to HMRC should be classified as employees. 

If a worker is paid as a contractor rather than an employee, then the employer can avoid paying employers’ NIC.

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By GlobalData

HMRC believes that across the country’s top 2000 businesses, the employers underpay £1.4bn in taxes relating to employment and a further £67m in taxes on expenses and perks for managers and directors.

PfP managing director Adds Kevin Igoe said: “HMRC follows the money. It goes after where it thinks the most tax is avoided and where it thinks it has cases it can win easily.”

“We are expecting a continued pressure on retailers from HMRC. One of the specific concerns that HMRC has is that retailers are now using software that allows them to take money both online and at tills without that sale registering for tax purposes.”

According to HMRC, the underpaid taxes by the top 2000 businesses in the UK amounts to £34.3bn.