17 January 2025
In late 2024, the government estimated that the tax gap (the difference between the annual amount of tax HMRC collects and the amount it believes is payable) stood at £39.8bn. To reduce this figure, it was announced that HMRC would be investing £1.6bn over five years to fund the recruitment of 5,000 additional compliance officers and 1,800 debt management officers: a 10% uplift on the existing headcount, with the first 200 compliance officers reportedly recruited in November 2024.
What does this mean for HMRC compliance activity in 2025 and beyond?
Our five predictions are outlined below.
1. Use of ‘one to many’ campaigns
One to Many (OTM) campaigns are not formal compliance checks, but instead are designed to either educate taxpayers on common pitfalls or to prompt them to review their tax affairs for potential inaccuracies. With the onus on taxpayers to review their own position and disclose underdeclared tax liabilities to HMRC, this is a cost-efficient method for HMRC to raise revenue.
2024 saw a number of OTM campaigns, targeting individual taxpayers, partnerships, trusts and companies, and 2025 has already seen HMRC issue OTM emails to several charities in relation to VAT on non-business income.
2. Continued focus on research and development tax relief
April 2024 saw the introduction of a merged scheme for research and development (R&D) tax relief, aimed at simplifying and streamlining the process for claiming relief to support its role in incentivising innovation and growth. At the same time, changes to the claims process were introduced, aimed at tackling errors and abuse and facilitating more efficient HMRC compliance checks to enable the timely processing of legitimate claims. Prior to this, it was estimated that for the year to 31 March 2022 error and fraud in R&D claims cost the exchequer £1.34bn.
Given the significant amounts involved and high compliance risk profile, we expect HMRC to continue to focus on and allocate resource to policing R&D tax reliefs.
Indeed, a new disclosure facility was introduced on 31 December 2024, specifically designed to assist companies in disclosing errors in historic R&D tax relief claims.
3. International business tax considerations
New international tax frameworks designed by the Organisation for Economic Co-operation and Development (OECD) as part of its global base erosion and profit shifting (BEPS) project to address concerns raised through the G20 inter-governmental forum over international tax avoidance have reduced the scope for such avoidance and increased the information available to tax authorities relating to businesses’ global tax affairs. These measures mean that businesses must place greater emphasis on regularly considering issues such as transfer pricing, hybrid mismatch rules, interest deductibility, the application of local indirect taxes, customer tax issues and the potential for cross-border tax disputes in detail.
Due to the large amounts involved, we expect HMRC’s international tax compliance activities to continue throughout 2025 and beyond, although the complex issues involved will no doubt require HMRC to rely heavily on new data analysis methods and its significantly reduced population of technically experienced officers.
4. Exchange of individual taxpayer information
HMRC continues to receive information on individual taxpayers through the common reporting standard (CRS), with financial institutions from over 100 tax jurisdictions automatically exchanging information on financial accounts on an annual basis.
Statistics published by HMRC in October 2024 relating to compliance activity into individuals with foreign income in 2018/19, documented net under-declarations of tax liabilities totalling £0.3bn. Whilst this is a relatively small element of the tax gap, the cost to yield ratio is likely to be high, given that this amount was predominantly generated from OTM correspondence issued by HMRC, and we expect individuals with cross-border tax affairs will continue to be seen as a valuable area of interest for HMRC.
On or before 31 January 2025, digital platforms across several industries will be required to share certain taxpayer information with HMRC for the first time. These digital platforms include those facilitating short-term property rentals, private hire vehicles and online private sales activity to name just a few. While it may take some time for HMRC to interpret the information received, compliance activity relating to this information should be expected to arrive during 2025.
5. Serious fraud and avoidance
It was reported in November 2024 that HMRC investigations into serious tax fraud and avoidance were at a six-year low. However, last year also saw some high-profile tax fraud convictions reported by the national press. With HMRC under pressure (both by politicians and the general public) to reduce the tax gap over the next five years, perhaps 2025 will see an increase in compliance activity in this area.
Whilst the above are only predictions of where HMRC will focus its compliance activities in the short-term, the government will almost certainly continue to increase the pressure on HMRC to close the tax gap. With this pressure, and the increased resource and additional information made available to HMRC, there is no doubt in our view that the level of compliance activity will be higher than we have seen in recent years.
For more information, please get in touch with Olivia Wiggett, Paul Marcroft, or your usual RSM contact.

