Under the Labour government, HMRC has shifted from a reactive to a highly proactive stance and tax experts are expecting increased tax enforcement in the new year.
The government has committed to investing an additional £555m annually in HMRC resources to boost tax compliance and transform its technology.
The investment aims to raise an extra £5.1bn per year by the end of the current Parliament, as HMRC focuses on closing the tax gap, estimated at over £5bn.
But as noted by a Public Accounts Committee (PAC) report, this figure could be “just the tip of the iceberg”.
Going into 2026, Andy Brown, global head of tax disputes, Kennedys, stated that “we believe that next year we are likely to see a shift towards increased enforcement actions by national tax authorities, as well as widening the scope of current tax regimes.”
“This will impact clients as it will increase their exposure to investigation, which in turn will increase compliance costs,” he added.
HMRC focuses on enforcement
This comes as HMRC plans to employ 5,000 new compliance officers by 2029/30, with recruitment beginning in 2026.
This isn’t just in the UK; in the UAE, the Federal Tax Authority has increased investigations by 110.7 per cent since 2024, and the OECD Pillar Two, a global tax initiative aiming for a 15 per cent minimum effective corporate tax rate for large multinational companies, is set to roll out.
The shift is being driven by fiscal pressure to increase revenue for governments, as purse strings have tightened, and governments’ ability to use technological advancements to help fill the gaps.
Tariffs as tools
Brown added that another trend in tax disputes in 2026 will be trade fragmentation and the use of tax/tariffs as a geopolitical tool.
“The past 12 months have seen increased volatility in trade policy, particularly from major economies being driven by the tense nature of relations between world leaders and constantly shifting geo-political rivalry,” he explained.
Back in April, US President Donald Trump announced “Liberation Day” tariffs, a “barrage” of tariffs imposed on countries and businesses that upended the international trading order.
Brown added, “No doubt, global trade policy in 2026 will continue to create uncertainty, with tariffs and tax policy frequently being deployed as instruments to guard national financial security.”
AI to take centre stage
The tax experts noted that another major trend for tax disputes in 2026 will be the growth of AI.
As outlined, the tax authority is already deploying machine learning tools to detect anomalies, and taxpayers are relying on AI to manage their own exposure. “The impact on clients will see new types of procedural risk,” Brown stated.
“Authorities will also increasingly turn to predictive models and algorithm-based audits and assessments, capturing more breaches with greater accuracy,” Brown explained.
“On the upside, there will, however, be an opportunity for clients to increase proactive compliance and early engagement through AI,” he added.