The insurer PfP found that 52% of small businesses find the tax probes too rigorous, while 56% do not think HMRC attempts to minimise the cost, time and effort involved in dealing with the investigations.
It warned that tax investigations can be disruptive for small businesses, and can result in large professional fees.
Kevin Igoe, managing director at PfP, said, “Small businesses think they are getting rough treatment from HMRC and are making this clear.
“[They] are often at the receiving end of lengthy tax investigations, which can be very disruptive. Many of these businesses also do not have the resources at their disposal to manage an inquiry or negotiate with inspectors.”
A HMRC spokesperson said, “We do not recognise the figures quoted. We treat all businesses fairly and consistently. Where businesses satisfactorily explains entries in their tax returns, we close down the enquiry immediately.
"HMRC does not fine anyone if reasonable care is taken in completing a return. Only if a customer is careless or deliberately submits an incorrect return can they be liable for a penalty."
Last month, HMRC revealed that almost half (41%) of its tax gap came from small businesses. The group is responsible for an overall gap of £13.7bn. Large businesses accounted for a further £7bn.
The tax gap is the difference between the amount of tax that should be paid to HMRC and what is actually paid.
PfP said the focus on small businesses is expected to continue because of the high levels of extra tax collected by HMRC through its investigations into them.
The insurer added that the Individuals & Small Business Directorate collected an additional £16 in taxes for every £1 spent on their investigatory staff in 2016/17.