HMRC large business compliance 2026: what the government’s response means for businesses

Government endorses HMRC’s large business compliance strategy while calling for further reform

The government has accepted all seven recommendations made by the Public Accounts Committee (PAC) following its review of HMRC’s approach to large business tax compliance.

As we discussed in our earlier article, large business compliance 2026: key insights from HMRC and Public Accounts Committee reports, both HMRC’s Large Business Customer Survey and the PAC report painted a broadly positive picture of HMRC’s relationship with large businesses. However, they also highlighted concerns in some areas.

The government’s response published in the Treasury Minutes in September 2026, provides further detail on what HMRC plans to do next.

For large businesses, the response does not signal a major change in direction. Instead, the response largely supports HMRC’s existing approach while setting out how it intends to improve compliance processes, make better use of technology and gather more insight into tax risk.

HMRC Customer Compliance Managers (CCMs): expansion of co-operative compliance under review

HMRC’s Large Business Directorate works with around 2,000 of the UK’s largest and most complex business groups. Each business is allocated a Customer Compliance Manager (CCM), whose role is to build an understanding of the organisation’s tax affairs, identify risks and facilitate engagement between the business and HMRC.

The PAC concluded that this approach is working well. The government has agreed that HMRC should explore whether the co-operative compliance principles could be applied to businesses currently managed outside the large business population.

HMRC is carrying out a test and learn programme and will report back to the committee on the results. For existing large business customers, the response reinforces HMRC’s commitment to collaborative engagement through the CCM model.

HMRC special measures regime: why its effectiveness is being reviewed

The PAC was critical of HMRC’s special measures regime.

The regime was introduced in 2016 to deal with large businesses that repeatedly fail to engage with HMRC in an open and collaborative way. However, no business has ever been placed into special measures.

The committee questioned whether the regime is acting as an effective deterrent and whether the current threshold for using it is set too high.

The government has accepted the recommendation that HMRC review the regime and report back next year on its findings, including any evidence of a deterrent effect and whether changes to the threshold should be considered.

At this stage, no changes have been proposed. However, businesses should expect continued scrutiny of how HMRC’s existing powers are being used and whether there should be any changes.

HMRC tax enquiries and disputes: how HMRC plans to reduce investigation delays

The PAC report highlighted the issue of lengthy compliance interventions.

The committee noted that large business enquiries took an average of 17 months to conclude during 2024-25, while cases involving litigation averaged 97 months.

The government’s response acknowledges the need for faster resolution, especially where litigation is involved and outlines several initiatives intended to improve performance. These include:

• Digital Action Plans for all large business enquiries
• Greater use of technology and Artificial Intelligence (AI) to analyse large datasets
• Enhanced capability and training for compliance teams
• Increased use of information powers where appropriate
• Encouraging the use of Alternative Dispute Resolution (ADR)

Long-running enquiries create uncertainty and can take up a great deal of management time and resource. HMRC’s focus on reducing the length of cases is therefore welcomed.

HMRC technology, AI and data analytics: what the £1.6 billion transformation programme means for large businesses

The PAC questioned whether HMRC had adequately explained how its £1.6 billion transformation programme would improve large business compliance.

The government’s response explains that HMRC expects investment in technology to improve its ability to identify risks, analyse data, manage enquiries and deploy specialist resources more effectively. It also points to the increasing role of AI and advanced analytical tools.

As HMRC’s data capabilities improve, it is likely to place greater reliance on data analytics when identifying potential risks and selecting areas for enquiry. As HMRC develops its data and insight capabilities, businesses may find that greater emphasis is placed on consistency across different tax reporting obligations and governance processes.

Although the government’s response does not specifically address how these regimes will interact, information obtained through transfer pricing reviews, Senior Accounting Officer (SAO) processes, uncertain tax treatment (UTT) notifications and Pillar Two reporting may increasingly be viewed together as part of HMRC’s overall assessment of tax risk.

This places greater importance on consistency across tax governance processes, documentation and reporting.

Businesses may therefore wish to consider whether their existing governance frameworks, tax strategy documentation and internal controls remain fit for purpose as HMRC’s compliance approach evolves.

While acknowledging HMRC’s statutory confidentiality obligations, the committee argued that Parliament and the public need greater reassurance that disputes are being handled fairly and consistently.

The government has agreed to review what additional information HMRC may be able to provide regarding:

• The scale and outcomes of assurance testing
• Themes emerging from large business disputes
• The outcomes of large business compliance activity

Although taxpayer-specific information will remain protected, businesses may see more information on common themes and risks emerging from HMRC’s compliance work.

Pillar Two reporting: managing international tax risk and compliance expectations

International tax risks remain a key area of focus for HMRC.

The government’s response confirms that HMRC will report to the PAC next year on the first Pillar Two returns submitted by affected businesses, including filing rates and the insights gained from the information provided.

Businesses should therefore view Pillar Two not simply as a new reporting requirement, but as part of a wider compliance and governance framework. Ensuring consistency between Pillar Two returns and other tax disclosures is likely to become increasingly important.

Tax certainty, legislative complexity and HMRC support for large businesses

The final recommendation addressed the complexity of the UK tax system.

The committee noted that around half of the large business tax gap results from differences between HMRC’s interpretation of tax law and that of large businesses.

The government points to a number of HMRC initiatives aimed at improving certainty, including its Transformation Roadmap, continued investment in the CCM model and the Advanced Tax Certainty Service.

Where legal interpretation disputes arise in circumstances where there is no avoidance, but where a business’s interpretation of the law and its application leads to a different outcome from that intended by legislation, HMRC’s approach is to include clearer guidance and, where appropriate, consider legislative change.

Five key takeaways from the government’s response for large businesses

The government’s response does not signal a major change in HMRC’s overall approach to large business compliance. However, it does provide a clearer picture of where HMRC is heading.

Taken together, the developments outlined in the Treasury Minutes suggest:

1. Greater use of data and analytical tools in compliance activity
2. Increasing focus on evidence supporting tax positions
3. Continued importance of tax governance and documentation
4. Growing use of Pillar Two information to understand international tax risks
5. Ongoing efforts to improve tax certainty and reduce enquiry times

For many businesses, this will reinforce the importance of strong tax governance, clear documentation and well-established compliance processes.

How Saffery can help your business manage its risk and strengthen governance

Our large business tax specialists help businesses manage tax risk, strengthen governance and engage confidently with HMRC.

We can help businesses:

• Review tax strategy and governance documentation
• Review Senior Accounting Officer (SAO) processes and documentation
• Undertake corporate criminal offence (CCO) risk assessments and reviews
• Support uncertain tax treatment (UTT) assessments and reporting requirements
• Prepare for Business Risk Review Plus (BRR+) reviews
• Manage HMRC enquiries
• Support transfer pricing projects
• Help with Pillar Two reporting obligations and related governance requirements

If you would like to discuss the implications of the government’s response for your business, please speak to your usual Saffery contact or get in touch with our team.