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      Karmjit Mader is a Tax Disputes Partner in KPMG, with over 20 years’ experience supporting clients in managing contentious HMRC interactions such as enquires and historical disclosures with a focus on individuals and private businesses. She has a deep expertise in HMRC’s civil tax administration powers and HMRC’s guidance on compliance and conduct.

      Lee Ellis is a Barrister, accredited Mediator and Partner in KPMG’s award-winning Tax Dispute Resolution legal team. He has over 15 years’ experience assisting corporates and individuals throughout the tax dispute lifecycle; from the identification and management of risk in respect of a potential dispute, to engagement with HMRC and achievement of settlement/resolution including through the use of ADR, to the management of proceedings before the Tax Tribunal and Higher Courts.

      Family businesses (and private enterprise) are a cornerstone of the UK economy, often spanning generations and combining commercial success with strong family values. That combination can, however, create complexity – in ownership structures, decision‑making and the way business and personal finances interact.

      HMRC has increasingly recognised this, and family businesses and connected individuals are now firmly on its radar, as part of its broader compliance focus on private enterprise.

      Karmjit Mader

      Partner - Tax

      KPMG in the UK

      HMRC’s current activity in the family business space

      HMRC is investing heavily in its Mid-size Business and Wealthy division with many of its approaches to compliance with large business being adopted to not only look at corporate tax positions, but also at how the wider family group and its wealth is structured, funded and rewarded.

      It also continues to invest heavily in data including AI risk assessment capability and specialist teams focused on wealthy individuals and complex business structures. For family businesses, this is playing out in several ways:

      • More enquiries (formal and informal) into family‑owned groups

        HMRC is asking detailed questions about how profits are extracted, how directors and shareholders are rewarded, and whether business and personal expenditure are clearly separated.

      • More detailed information requests (formal and informal)

        HMRC has increasing access to information from other jurisdictions and often will use this as a basis to ask for additional information. Like with enquires, there is a trend that information requests are issued using formal notices which carry penalties if not complied with correctly. Recent court decisions have successfully challenged HMRC notices on the grounds of being unnecessarily large and containing unreasonable demands. Therefore it is important to ensure that the notices are correct when received.

      • Closer scrutiny of ownership and funding structures

        Use of international holding companies, family investment vehicles, trusts and shareholder loans is being examined to ensure that tax treatment matches the commercial reality.

      • Increased focus on interactions between business and individuals

        HMRC is looking at how benefits, loans and assets flow between the company and family members – for example, director loan accounts, company‑owned properties, and family members on the payroll.

      • Renewed attention on succession and inheritance planning

        Claims to reliefs such as Business Property Relief (BPR) are being revisited, along with historic planning that may no longer sit comfortably with HMRC’s current view.

      What’s clear is that HMRC is not treating the company and its owners as separate. Instead, it is joining the dots across the family, the business and the wider wealth structure to challenge and change behaviours and close the tax gap it considers exists in this area and engaging in new initiatives to that end.

      Why family businesses are attracting HMRC attention

      Several factors make family businesses a particular focus for HMRC:

      • Structural complexity without large in‑house tax teams

        Many family businesses have grown over time, adding entities, properties and investments. Structures that have evolved organically can be harder to explain to HMRC, and may not have been reviewed recently against current tax law and practice. Often advice between the relevant entities and individuals is taken separately.

      • Blurred lines between business and personal

        Family businesses often support family needs – from housing to school fees, cars, travel or wider lifestyle costs. Where the boundaries between business and personal are not clearly documented, HMRC can challenge the tax treatment of those arrangements.

      • Historic planning in a new environment

        Arrangements that were considered acceptable several years ago can now attract scrutiny, especially where they involve offshore elements, trusts, or extraction of value from the business.

      • Use of data and third‑party information

        HMRC’s access to banking, property and international tax data means that it can spot patterns across family members and entities. This can trigger questions if the data does not appear to align with tax returns. AI is now driving greater analysis and risk assessment of this data.

      Taken together, these factors mean that family businesses and their owners are more exposed to the risk of HMRC challenge than ever before.

      How we can help

      When HMRC’s interest escalates from routine questions to formal enquiries or potential litigation, specialist support becomes critical. At KPMG, we help family businesses and their owners manage tax disputes strategically, protecting both the commercial and personal position.

      Our support typically focuses on four areas:

      The way you respond in the early stages of an HMRC interaction or enquiry can shape the entire trajectory of the dispute:

      • Assessing the nature and seriousness of HMRC’s concerns (including whether behaviour might be viewed as careless or deliberate)
      • Identifying potential exposure across income tax, corporation tax, inheritance tax, and other regimes
      • Developing a clear dispute resolution strategy – whether to contest HMRC’s position, seek negotiated resolution, or make a disclosure

      This helps you move from a reactive posture to a controlled, strategic response where you avoid unnecessary professional costs which are often much higher if simply reacting to HMRC. Often it is also an expensive time-cost for key personal who should be focusing on the commercial business but find their time drawn into HMRC matters.

      Where HMRC takes informal and formal action – from compliance checks to other more serious investigations – the process can be demanding and complex:

      • Handling information requests, interviews and meetings with HMRC.
      • Ensuring requests from HMRC and responses back are accurate, consistent and appropriately scoped.
      • Ensuring statutory provisions are followed and appropriately applied by HMRC and all taxpayer safeguards considered.
      • Advising on penalty mitigation in line with statutory provisions and case-law.
      • Appropriate use of disclosure facilities and HMRC escalation where there maybe issues historically.

      Our dispute resolution specialists help you engage constructively and proactively with HMRC, while protecting your position.

      Not all disputes need to end up before the Tax Tribunal – but some do. We can advise, support and act for you across the full spectrum:

      • Using HMRC’s tax dispute resolution and other guidance in securing negotiated settlements for clients.
      • Exploring Alternative Dispute Resolution (ADR) where appropriate.
      • Assessing the merits of litigation, including likely costs, timeframes and prospects of success.
      • Supporting you with technical analysis, evidence preparation and expert input if a case proceeds to the Tribunal or courts.
      • Collaborating and working with existing advisors so as to provide practical and commercial advice.

      The objective being to achieve a fair, sustainable outcome that reflects the commercial reality of your family business and arrangements.

      Resolving a dispute is only part of the story; it is often an opportunity to strengthen your position going forward:

      • Identifying and correcting weaknesses in structures, processes and documentation exposed by the dispute
      • Implementing governance and controls to reduce the risk of similar issues arising again
      • Ensuring that succession plans, profit extraction and family wealth structures can withstand future HMRC scrutiny.

      By combining disputes expertise with wider technical support, we help families engage with HMRC confidently and from a position of strength.

      Our people

      Karmjit Mader

      Partner - Tax

      KPMG in the UK

      Lee Ellis

      Partner, KPMG Law

      KPMG in the UK

      Shashi Prashad

      Tax Partner KPMG Enterprise

      KPMG in the UK

      Our tax insights

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