HMRC Report on Large Business Tax Strategy Behaviour


HMRC recently published a report following research into what it is that drives large businesses’ approach to their tax strategy. In particular they wanted to investigate what the triggers are to a change in tax strategy and who within the business takes that decision.

HMRC selected 35 businesses from the Large Business Directorate. They conducted interviews with individuals in those businesses who had a strategic decision-making role in relation to tax, such as Heads of Tax, Tax Directors, CFOs and others in senior positions. The businesses were from a range of business sectors with a spread of HMRC risk ratings – 12 higher risk, 7 medium risk and 16 lower risk.

Key findings included that:

  • recent changes in the tax climate had impacted on tax strategy with a reduced appetite for tax schemes, driven by public, press and government scrutiny;
  • tax had become increasingly important for senior management, and was a greater focus for the board and shareholders;
  • the culture of a business was a key influence on tax strategy;
  • businesses that were calculated risk-takers were most reactive to regulation and penalties whereas those that were more risk-averse tended to be more responsive to public pressure, regulation and the view of HMRC;
  • changes in leadership or ownership, regulation and penalties, and public scrutiny were seen to have the most potential to transform and alter a business’s tax strategy;
  • businesses with a greater tendency to take risks tended not to have written or published strategies, while those with lower risk-appetite tended to have more formalised strategies;
  • whereas the benefits of being low risk were recognised amongst those who had achieved the rating, other businesses felt it could entail a loss of contact and support from HMRC.


The full report can be viewed here

It will be interesting to see whether these findings have an impact on CRM’s risk management processes going forward or influence HMRC’s approach to managing the tax compliance risk of businesses outside the Large Business Directorate.