The HMRC have issued a new briefing on tackling tax avoidance. In the document released yesterday it explains the steps that are being taken to stop those bending the rules of the tax system to gain an unfair tax advantage, in cases where a business or individual operates within the letter – but not the spirit – of the law.

Figures from HMRC show that the tax gap – the difference between what is owed and what is collected – is about £35 billion, which is 8pc of the total amount of tax due. Tax avoidance accounts for 14pc of this gap – around £5 billion or 1pc of the tax due.

A spokesman from the HMRC said: “It is important that our customers know that if they choose to engage in tax avoidance we will be relentless in pursuing them.

“We will challenge tax avoidance and will take legal action against [tax avoidance] schemes whenever possible. Instead of the tax savings they hoped to achieve, people who use tax avoidance schemes run the risk of wasting money on fees for a scheme that does not work, and will have to spend time dealing with an in-depth investigation by us into their tax affairs. Taxpayers may find themselves being cross-examined before a tax tribunal and having their tax avoidance exposed to public scrutiny when the tribunal’s decision is published.”

Mike Warburton, director of tax at accountants Grant Thornton, said that while it is understandable that HMRC are taking rigorous steps to tackle tax avoidance, the problem is trying to define it.