A clamp-down on VAT non-payment that targets small businesses has increased government receipts by more than 30 per cent in just 12 months.

Tax investigation insurance business PfP says tax inspectors have raised more than £1.8 billion in additional money compared with the previous 12-month period.

HM Revenue and Customs collected a total of £5.3 billion from VAT investigations compared with a previous figure of £3.5 billion.

The main target of the clampdown have been small businesses, which are estimated to have paid £8.4 billion in the last three years compared only £3.9 billion from major corporates.

HMRC’s local teams, which specialise in investigating small and medium-sized businesses, have increased the VAT take from their investigations by a huge 70 per cent in the last year – from £2.3bn to £3.9bn, says PfP.

“In general, the VAT regime for small businesses has become harsher over the last few years,” said Kevin Igoe, PFP managing director.

“A company that files its VAT return on paper and not online will face a penalty. HMRC is also making increased use of its powers to confiscate and sell-off the assets of small businesses that are late in paying their VAT.”