PAC has published a report on the work of HMRC’s large business directorate. The directorate works with around 2,000 of the UK’s largest business groups, including those with turnover over £200m and some smaller groups viewed as having particularly complex tax affairs.

HMRC takes a more hands-on approach with large businesses, known as ‘cooperative compliance’, than with other taxpayers. Under this model, it assigns to each business a customer compliance manager (CCM) to work constructively with the business and build an in-depth understanding of its tax affairs. 

What HMRC is doing well 

PAC has found that HMRC’s tax compliance work with large businesses “seems to be working well and brings in a good return on its investment”. It reports that: 

• in 2024/25, the directorate’s compliance yield (ie, tax collected that would otherwise have been lost) was £15.8bn, equivalent to £95 for every £1 spent on staff; and
• a 2024 survey of large businesses revealed that 82% had an overall positive experience dealing with HMRC and 91% had a good relationship with their CCM. 

More recent data was released in the days following the publication of the report, showing that: 

• the large business directorate’s compliance yield for 2025/26 (£14.9bn) was lower than that for 2024/25; and
• large business satisfaction with HMRC and the CCM model remains high (at 78% and 92% respectively, based on the 2025 large business survey). 

PAC’s findings echo those of the National Audit Office in its report published in February 2026.  

HMRC is exploring expanding the cooperative compliance model and will pilot applying it to other types of business from September 2026.  

Where HMRC could improve 

The report recommends that HMRC: 

• Makes better use of its powers. PAC comments that “HMRC seems reluctant to make full use of its available powers”, referring to the “special measures” regime (Finance Act 2016, s161 and Sch. 19, part 3) through which HMRC can impose sanctions on “the worst offending large businesses”. PAC notes that, in the 10 years since the regime was introduced, HMRC has not put a large business into special measures, potentially undermining the regime’s role as a deterrent. 
• Does more to reassure the public. PAC says that “Parliament and the public need to know that large businesses are paying their fair share of tax” but “there is a dearth of public information from HMRC on the most complex and long-running cases it is investigating”. PAC recommends that HMRC considers “how it plans to improve assurance to Parliament and the public”.
• Reduces compliance burdens for businesses. PAC notes that HMRC takes on average 16 months to resolve investigations into large businesses, increasing to 97 months for cases involving litigation, commenting that “this is far too long”. This is said to be due, in part, to the complexity of the UK’s tax system. HMRC is asked to set out what it can do “to accelerate the time taken to resolve compliance investigations” and to “support large businesses in navigating a complex and burdensome tax system”.
• Closely monitors the impacts of Pillar Two. PAC notes that, even with the implementation of Pillar Two, which is “expected to impose significant added complexity and administrative burdens” on businesses, “the scale of risks posed by large multinationals diverting profits across borders remains significantly high”. PAC recommends that HMRC analyses the results of the first returns to assess the impacts of Pillar Two on businesses and its efforts to manage international tax risks. 
• Gets the most out of its IT transformation programme. HMRC has received £1.6bn of investment in new IT infrastructure but was “only able to cite limited examples” of how this funding would “better support its large-business tax compliance work”. HMRC is asked to set out what it intends to achieve and the key milestones against which progress can be judged.