Officers from HM Revenue & Customs are paying more visits to Mayfair – the heart of the hedge fund industry - to investigate the tax arrangements of what is considered a lightly regulated industry.

Hedge fund managers have earned enormous wages through finance complex deals and the Revenue is now demanding to know more about their tax arrangements, according to The Observer, which quoted ‘industry sources.

Assets in UK-based hedge funds have grown threefold in the past five years and now total $130bn (£68.4bn) although they have not performed as well recently.

Managers of these funds, while mostly adding to the wealth of their super-rich clients have become very wealthy themselves, as they generally take a 20% slice of profits,

The Revenue 'is now trying to get up to speed and understand the industry' which has complicated tax affairs as many managers are not domiciled in the UK, and a lot of hedge-fund business is international.