HMRC consults on its engagement with large businesses

HMRC is consulting on its process for assessing the tax risk posed by large businesses and how such businesses might be further encouraged to achieve Low Risk status.


For HMRC's response to this consultation, see "Enhanced risk assessment for large business compliance".

HMRC has released a consultation document, “Large business compliance: enhancing our risk assessment approach”, which seeks feedback on HMRC’s approach to evaluating and managing the tax risk profile of large businesses. The consultation offers the opportunity for businesses to engage with HMRC to improve the Business Risk Review (BRR) process going forwards, focussing both on how HMRC might better target their risk assessment and also how businesses might be encouraged through this system to move to lower risk categories.


HMRC’s current system of Customer Relationship Managers (CRMs) and BRRs are the cornerstone of how HMRC interacts with large businesses in the UK. This typically covers businesses that operate in the UK with a turnover of more than £200m (or which are otherwise complex or a part of a large multinational group).

The BRR involves assessing these large businesses, based on the understanding of the allocated CRM, based on the tax risk they pose. This risk assessment will typically consider three groups of risk factors:

  • inherent risk factors: arising from the complexity of the business and the tax issues which typically arise in that area, boundary issues arising from international arrangements and aspects of change, such as the pace of acquisitions/disposals and product/service changes
  • behavioural risk factors: arising from governance procedures concerning openness and cooperation with HMRC and management’s accountability for managing tax risk, ability to deliver accurate tax returns through accurate systems and processes and tax strategy, including its willingness to engage in artificial tax planning, and
  • contribution: whether the amount of tax declared looks reasonable in the light of what is known of the business.

Using the BRR, HMRC will determine if a taxpayer is Low Risk. Any taxpayer that is not Low Rrisk, is automatically Non-Low Risk. A Low Risk taxpayer is one that has an open and transparent relationship with HMRC, effectively manages their own tax compliance risk and who HMRC trust will not engage in aggressive tax planning. HMRC trusts that Low Risk taxpayers will bring issues to discuss promptly and pay the right tax at the right time. HMRC expects Low Risk taxpayers to give advance warning of any significant or potentially contentious voluntary disclosures; and share their approach to identifying and managing tax compliance risk across the business. Trusting the taxpayer to comply with their obligations and involve HMRC as necessary is one of the outcomes of Low Risk status. In cases where a Low Risk taxpayer breaches this trust, HMRC will take appropriate action which may include removal of Low Risk status. Low Risk taxpayers are effectively rewarded with less HMRC scrutiny and fewer audits.

All other large businesses (the majority) are treated as Non-Low Risk and will be subject to a BRR each year. However, HMRC recognise that this category covers a wide spectrum of tax compliance behaviour, which may create different types of risk.


HMRC are now consulting on the BRR process, the content of the BRR review process, whether the results of the BRR review can be enhanced and what other outcomes and opportunities (both for HMRC and businesses) may exist in this area.

One of the key areas of the consultation is the criteria used by HMRC within the BRR review and whether additional areas should be considered. Another option being considered is whether the BRR process could be made more specific to particular areas of high risk where a business may only be high risk in relation to a limited section of the UK tax regime.

HMRC is also considering the outcome from the BRR process. In particular, it is recognised that the allocation between Low Risk and Non-Low Risk is extremely blunt. Those in the Non-Low Risk category can be there for a number of reasons ranging from engagement in business which inherently carries complex tax risk to a minimal investment in tax accounting arrangements. The consultation moots the option of a more nuanced categorisation of taxpayers, either using more segments (significant, high, high-moderate, low-moderate and Low Risk) or some kind of box grid. A more detailed segmentation of taxpayers might enable HMRC to refine its approach to the tax risk different business pose. However, HMRC also note that more segmentation might also provide opportunities for encouraging more large businesses to adopt a Low-Risk approach to tax compliance. In order to incentivise positive behavioural change, the consultation notes that HMRC could potentially introduce additional support to Low Risk businesses that reduces their administrative burden. For example, offering quicker clearance procedures or offering a view on novel arrangements more speedily.

HMRC also note that the BRR process should be aligned with the OECD’s Forum of Tax Administration’s Large Business Programme Tax Control Frameworks (TCF) within multilateral enterprises. This emphasises similar features to the BRR, but HMRC are keen to ensure that there is a direct alignment between the two processes.


The broad ranging consultation by HMRC is welcome, offering opportunities to improve the current CRM and BRR processes. Its focus is not only on how HMRC can better target its risk assessments but also how it can encourage and facilitate businesses to actively engage in moving to a Low Risk category.

However, ultimately the BRR process remains at heart a subjective one, based to a large degree on the perceptions of the individual CRM. That is not something that the consultation considers.

Comments on the consultation should be sent no later than 06 December 2017 by email to

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.