According to reports the Revenue is querying payments made by one of Elton's companies on his multi-million pound earnings from overseas tours. The Revenue is understood to be investigating payments going back to the 1980s.
Officials claim J Bondi, the company that receives the Elton's earnings from his concerts held outside Britain, may not have paid the full amount of national insurance on the salary it pays for his work abroad. The company is contesting the claim.
The Express newspaper on February 4, 2000, revealed Elton was paid £25m for the 17 months to December 1998 by J Bondi and another company, Happenstance, which receives his overseas royalties. This compared with just £6m he was paid by the two companies for 1997.
The dispute with the Revenue goes back to 1986 and could result in millions of pounds of employer's NIC being paid over by the companies on the salary paid to Elton.
J Bondi's former management John Reid Enterprises and its ex-auditor Price Waterhouse - now part of PricewaterhouseCoopers - are now being sued by the company for a separate matter of accounting for overseas tour costs which Elton claims have lost him cash. KPMG is currently the auditor for the company.
The dispute with the Revenue is revealed in the 1998 accounts for J Bondi which were signed last week. A note in the accounts states: 'This dispute relates to the employer's contributions due in respect of the earnings paid to the employers whilst they are working overseas. It is not possible to quantify the amount of any repayment or liability that may arise.'