Taxation

Question

HM Revenue and Customs’ (HMRC) Large Business team manages the tax compliance of the UK’s 2,000 largest businesses through a resource intensive Customer Compliance Manager (CCM) model because their tax at stake, their size and complexity mean that this is the most cost-effective way of ensuring they pay the right amount of tax. This approach is in line with international best practice on cooperative compliance.

CCMs are senior, highly trained compliance professionals, who lead teams of skilled specialists to scrutinise HMRC’s large business customers. This gives an in-depth knowledge of the business and the economic and commercial environment in which it operates, its appetite for tax planning and its internal governance, which allows HMRC to effectively identify and tackle tax compliance risk and ensure the right amount of tax is paid.

The UK Tax Gap in 2022 to 2023 (Measuring Tax Gaps 2024 Edition) was £39.8bn or 4.8% of total theoretical tax liabilities. The element of the Tax Gap relating to large businesses in 2022 to 2023 was £4.3bn (or 0.5% of the UK’s total theoretical liabilities) decreasing from £7.4bn (or 1.7% of the UK’s total theoretical liabilities) in 2005 to 2006. Whilst the UK tax gap for large businesses remains low (the latest figures showing this customer segment pays over 99% of its theoretical liabilities), HMRC continues to take a risk-based approach, focusing resources to close the Tax Gap.

HMRC subjects large businesses to an exceptional level of scrutiny, investigating around half of the UK’s largest businesses at any given time

As of 31 March 2024, HMRC’s tax under consideration for large businesses was £44.9 billion. Tax under consideration is an estimate of the amount at stake in open enquiries, which demonstrates that HMRC is very actively challenging large businesses on tax that may be due.

During 2023 to 2024, by effectively policing the tax rules as they apply to large businesses, HMRC successfully achieved compliance yield of £11.4bn