The Inland Revenue has investigated one in 10 small to medium sized businesses in the UK.

Alan Newton, chairman of the Tenon Forum, which compiled the research, said: "We predict that these investigations will happen more and more.

"SMEs' personal experiences of such investigations are that they can be intimidating and extremely unpleasant."

Some 62 per cent of those who had been investigated said it had caused disruption to their trade, although just one in four saw an increase to their tax charge following the visit.