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HMRC’s Crackdown on Large Businesses Doubles Tax Revenue to £15.8 Billion in Three Years

National Audit Office reveals HMRC’s ‘close contact’ approach yields £95 in tax for every £1 spent, as calls grow to expand strategy to high-risk firms

Record Tax Revenue from Large Businesses


HMRC’s Large Business Directorate has significantly increased tax compliance among the UK’s largest companies, securing £15.8 billion in additional revenue in 2024-25—double the amount from 2021-22. This success is attributed to a "close contact" approach, where dedicated compliance managers work directly with businesses to ensure adherence to tax rules.


  • Return on Investment: The directorate achieves a £95 return for every £1 spent on staff pay, four times higherthan HMRC’s average across all taxpayers.
  • Tax Gap Reduction: The tax gap (the difference between tax owed and tax paid) for large businesses has fallen to 0.7% of liabilities, down from 1.7% in 2005-06.


Effective but Limited Strategy


While the Large Business Directorate has been highly effective, its impact is limited to the UK’s largest companies, which account for two-fifths of total tax revenue (£337 billion in 2024-25). The NAO report highlights opportunities to expand this approach to other complex or high-risk businesses, which could further increase tax compliance and revenue.


  • High-Risk Corporates Programme: Since 2006, HMRC has used this program to tackle the most complex cases, securing £32 billion in extra tax. However, special measures powers (introduced in 2016 for non-compliant businesses) have never been used.
  • No Evidence of Sweetheart Deals: The NAO found no evidence of HMRC making special deals with large businesses, with 98.1% of cases following correct governance processes in 2024-25.


Challenges and Recommendations

Despite its success, the Large Business Directorate faces challenges, including data limitations and untapped legislative powers:


  • Data Gaps: HMRC lacks reliable short-term data on changes to the tax gap, making it difficult to assess trends or prioritize interventions.
  • Underused Powers: The NAO recommends HMRC explore barriers to using special measures for poorly compliant businesses.
  • IT Improvements: Better data recording and IT systems are needed to track productivity and inform future strategies.


Future Expansion and Efficiency


The NAO suggests that HMRC should:


  1. Expand the "close contact" approach to other high-risk businesses.
  2. Address barriers to using special measures for non-compliant firms.
  3. Improve IT systems to enhance data analysis and decision-making.
  4. Share best practices with other HMRC directorates.


Gareth Davies, Head of the NAO: "HMRC’s large business directorate has developed an efficient and effective approach to ensuring large businesses remain tax compliant. This has made a significant contribution to reducing the tax gap. HMRC should continue to explore whether this approach could usefully be extended to other complex and high-risk businesses."


Why It Matters: The doubling of tax revenue from large businesses demonstrates the effectiveness of HMRC’s compliance strategy, but scaling this approach could unlock billions more in unpaid taxes. The NAO’s recommendations provide a roadmap for further efficiency gains and expanded enforcement.