Kenneth Clarke, the Chancellor, is poised to use today's Budget to introduce further legislation aimed at blocking corporation tax loopholes in the wake of the Independent's revelation that Rupert Murdoch's News International has paid virtually no tax in the past 10 years, despite achieving profits of nearly pounds 1bn.
Tax experts are already braced for an extension of Inland Revenue powers to investigate companies' policies on transfer pricing, the arrangements under which multinationals account for sales between different subsidiaries. But other moves are likely as the Treasury continues a practice of adding to already complicated financial legislation measures designed to curb the tax-planning activities of accountants from big six firms and beyond.
One commentator suggested that Mr Clarke might be forced to draw attention to News International's activities in introducing any anti-avoidance moves.
The Inland Revenue refused to comment, but a spokesman said it was certainly interested in the UK implications of cross-border transactions and attempted to police them. He would not comment on the number of companies being investigated, but said authorities looked at companies "as and when we feel it necessary".
Yesterday, Gordon Brown, the shadow Chancellor, said he did not know the detail of the case, but added that tax avoidance was something the party was looking at.
Transfer pricing - which enables companies to reduce their tax charge legitimately by maximising profits shown in low-tax regimes, such as Singapore, and minimising those in higher tax regimes, particularly in mainland Europe - has been brought into focus by a case involving Glaxo Wellcome, the pharmaceuticals giant headed by Sir Richard Sykes.
The High Court recently ruled that the Inland Revenue is free to pursue the company for back tax incurred prior to the normal time limit of 1986, and this finding is expected to be the basis of the legislation to be announced today.
A recent Ernst & Young survey showed that 82 per cent of multinationals regarded transfer pricing as the most important area of tax for them and that half of them had been subjected to investigations into their use of it in the past.
So far, enthusiasm for avoiding inquiries through the use of "advance pricing agreements" - as are common in other countries - is low because of the amount of information that companies have to divulge to the authorities.
The Revenue's attack on transfer pricing is further demonstrated by the revelation in the organisation's annual report, published earlier this year, that it had disallowed deductions totalling pounds 1.6bn (correct) over several years claimed by an unnamed large company. No tax specialist was prepared to identify the company, but speculation centres on it being a large overseas-based multinational with large operations in the UK. Lindsay Dodsworth, a partner in the international tax group at Ernst & Young, said: "The mind boggles at what they were trying to get through. They must have been extremely aggressive and extremely ill-advised."
Moreover, Revenue staff, who are being freed up by the introduction of Pay and File and other initiatives to streamline the administration, are understood to be undergoing special training ahead of transfer to the international division.
Ms Dodsworth and her counterparts at other leading firms are in no doubt that these changes are part of a fundamental shift in the culture of the Revenue towards a more combative investigating agency. John Whiting, a tax partner at Price Waterhouse, said: "They are undoubtedly targeting the bigger companies."