The tougher approach is being driven by HMRC's expanding use of artificial intelligence and advanced data analytics

Hundreds of thousands of Britons could find themselves under investigation as HMRC steps up its crackdown on unpaid tax.

Tax experts are warning that the revenue authority is examining people's financial affairs more closely than ever, after securing or protecting around £10billion in tax during the last financial year.

The tougher approach is being driven by HMRC's expanding use of artificial intelligence and advanced data analytics, which are helping officials identify potential errors and unpaid tax more quickly.

Tim Stovold, head of tax at Moore Kingston Smith, said: "There is a definite trend of HMRC collecting more data from the wealthy and [the] businesses they own."

He said HMRC plans to require companies to provide more information about shareholder transactions, including cash withdrawals, loans, dividends and asset transfers.

Mr Stovold explained that checking this information against individual tax returns would once have been a slow and labour-intensive process.

However, modern data analytics now allows HMRC to identify potential discrepancies much more easily once it has the information.

At the centre of the crackdown is Connect, HMRC's data analysis system, which cross-checks information from banks, online marketplaces, social media platforms including Instagram, property-letting agents and tax returns to identify possible non-compliance.

According to law firm Pinsent Masons, information generated through Connect led to 540,000 tax investigations during the 2024-25 tax year.

Mr Ian Robotham, partner at Pinsent Masons, said: "The algorithms that it uses allow HMRC to spot anomalies that would otherwise go unnoticed by the human eye."

He added that with thousands of HMRC staff now using Connect, taxpayers face a level of oversight that would have been unthinkable just a few years ago.

HMRC's technology push comes as the authority works to narrow the £59.2billion tax gap, which represents the difference between taxes owed and amounts actually collected.

The taxman is also boosting incentives for those willing to report suspected tax evasion. This week, HMRC published new YouTube videos explaining its Strengthened Reward Scheme, which offers informants between 15 per cent and 30 per cent of any additional tax recovered, provided the information leads to collection of more than £1.5million.

Experts believe many whistleblower-triggered investigations will involve wealthy individuals.

Mr Hinesh Shah, partner at Pinsent Masons, said: "Once publicity spreads and it is clear that substantial financial rewards are being given out then there will be a noticeable increase in the quality and quantity of whistleblower evidence being provided to HMRC."

He noted that the greatest whistleblower risk may come from those with close knowledge of financial arrangements, including former employees, personal assistants and business associates.

Beyond whistleblower incentives, HMRC is demonstrating a growing readiness to pursue criminal prosecutions against those who evade tax.

The authority's elite Fraud Investigation Service secured 260 convictions against the most serious tax evaders during the 2025-26 tax year, according to HMRC's annual report published this week.

Mr Ian Dickinson, tax director at UHY Hacker Young, said: "HMRC appears increasingly willing to prosecute individuals who evade tax."

He added that with a multibillion-pound fiscal gap to close, the authority is likely to deploy all available legal tools to recover unpaid taxes.

Mrs Nicola Hine, a tax disputes partner at law firm CMS, noted that investigations into large and midsized businesses have roughly doubled over the past six years, with this trend expected to continue.

She advised that taxpayers should be well organised to respond to HMRC inquiries and manage their compliance.