Analysis of FTSE 100 corporate reports indicates this year’s figure is down 31% from the £2.39bn set aside in 2014.

Raichel Hopkinson, head of the practical law dispute resolution service at Thomson Reuters said: 'Governments are keen to be seen to tackle the problem. No business wants to be made an example of, or to find itself explaining a costly settlement.

‘Consumer-facing companies also have to deal with direct pressure from the public threatening to take their business elsewhere if they consider companies to be unethical in their tax policies.

‘The public’s perception of a company is often based on its ethical record, including whether it is perceived to be paying its fair share of tax.’

The figures suggest UK listed pharmaceutical companies made the biggest provision for tax disputes, setting aside £1.49bn. This accounts for 88% of the total provisions set aside by FTSE 100 businesses, up from 79% in 2014, and the study says this may partly be because of the sector’s greater exposure to transfer pricing disputes as they operate across multiple territories.

The government recently announced proposals requiring large businesses to publish details of their relationships with national tax authorities and their approach to tax planning.

In a consultation published in July, it said it intended to introduce a voluntary code of practice on taxation for big businesses. It said this would enable quicker resolution of significant tax issues and reduce the potential for disputes and litigation.

At the same time, the OECD will publish the outcome of its long-running base erosion and profit shifting (BEPS) reforms this November, in a bid to counteract multinationals using low-tax jurisdictions to minimise their tax bills.

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