HMRC yet to sanction a single large UK business in 10 years
Key Points
- HMRC has never used its special measures regime since gaining the power in 2016
- MPs said they could not verify HMRC's claimed deterrent effect
- The large business tax gap stood at £5.8 billion in 2023–24
- HMRC is reviewing whether to lower the legal threshold for special measures
- Decisions on changes are expected in 2027 following consultation
HMRC has never placed a large business into its special measures regime despite holding the power since 2016, the Committee of Public Accounts said in a report published on Friday (10 July).
The regime allows HMRC to sanction large businesses that display continued poor tax behaviour. HMRC told the Committee the powers were designed as a deterrent, and that it considers using special measures on any business entering its High Risk Corporates Programme. It has considered doing so in a small number of cases but has never followed through.
MPs said they found it difficult to know whether the claimed deterrent effect is real, given the powers have never been used.
HMRC conceded it could not demonstrate a deterrent effect in any specific case, but argued a broad body of contextual evidence supported the claim. It credited the regime with contributing to a big drop in the proportion of the large business tax gap stemming from avoidance or evasion.
The gap between what large businesses should pay and what they actually pay stood at £5.8 billion in 2023–24, or 0.7% of total taxes owed, down from 1.7% (£7.5 billion) in 2005–06. Large businesses account for 12% of the UK’s overall tax gap, compared with 60% for small businesses.
HMRC said a very high legal threshold on the avoidance behaviours needed to justify special measures is the key barrier to using them. It is now reviewing whether to lower that threshold, 10 years after receiving the powers, with decisions expected next year following a full consultation.
A damage to credibility
The Committee said the pattern damages HMRC’s credibility.
It noted HMRC also makes limited use of other powers, including its power to prosecute individuals who fail to prevent the facilitation of corporate tax evasion, and said this recurring trend undermines any future requests for further powers.
The Committee asked HMRC to report back within 12 months on the evidence for the regime’s deterrent effect and any changes it will seek to make to the threshold.
HMRC’s large business directorate works with around 2,000 of the UK’s largest business groups, which pay approximately two-fifths of all taxes HMRC collects. Around half are under investigation at any one time, with £70.1 billion of taxes under consideration as at October 2025.
