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Crossing the threshold: What large business classification means for your tax governance and relationship with HMRC

Michael Spencer · Posted on: July 23rd 2025 · read

For many businesses, achieving the scale and complexity required to be classified as a “Large Business” by HMRC is a significant milestone. It reflects growth, commercial maturity, and financial strength. However, it also marks the beginning of a new era of tax compliance, governance, and scrutiny.

If your business has recently crossed the threshold – typically where turnover exceeds £200 million or balance sheet assets exceed £2 billion – you may now be within the scope of HMRC’s Large Business regime.

This brings with it a range of new responsibilities and expectations, particularly under three key frameworks: Senior Accounting Officer (SAO), Business Risk Review+ (BRR+), and enhanced relationship management with HMRC. You may also be required to publish your Tax Strategy.

Here’s what you need to know.

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Senior Accounting Officer (SAO) Regime

Introduced to improve tax compliance in large corporates. Once in scope, your business must appoint an SAO – typically the CFO or Finance Director – who is personally responsible for ensuring the company has appropriate tax accounting arrangements in place.

What this means for your business:

The SAO must provide an annual certificate to HMRC confirming whether appropriate tax accounting arrangements are in place.

Any deficiencies must be disclosed.

There are personal penalties (up to £5,000) for the SAO if the required certificate is not submitted or if arrangements are found to be inadequate.

The regime encourages robust internal controls and documentation – especially for complex tax areas like VAT, PAYE, Corporation Tax, and R&D claims.

Top tip: Start early. Many businesses underestimate the effort required to implement and document the necessary controls, especially where multiple entities or jurisdictions are involved and finance teams are thinly spread.

Think in terms of months and years; not weeks or days. Assess resourcing and expertise gaps in your finance and tax function against greater scrutiny from HMRC . Work with HR and people leads to close the gaps to ensure your finance and tax function is fit for purpose.

Business Risk Review+ (BRR+)

HMRC’s BRR+ is a structured framework for assessing the tax risk of large businesses. The review is conducted by a HMRC’s Customer Compliance Manager (CCM) and results in a formal risk rating across several areas, including tax governance, systems and processes, and behaviours.

What you should expect:

Annual (or periodic) meetings with your CCM to review your tax affairs.
Assessment across three pillars: Governance, Systems & Processes, and Approach to Tax Compliance.
A risk rating (Low or non-Low) will be applied and can influence the level of scrutiny and the intensity of HMRC’s engagement.

Why it matters:

A Low-Risk rating will likely result in far fewer audits, greater trust, and more efficient resolution of issues.
A Non-Low risk rating may increase the likelihood of HMRC enquiries, challenge and ultimately more resource being required to coordinate HMRC enquiries and other HMRC interactions.
The BRR+ process places greater emphasis on tax strategy, board-level involvement, and documented governance structures.

Your next step: Review your tax control framework and ensure it aligns with HMRC’s expectations – not just for compliance, but also for strategic alignment and board oversight.

Relationship Management with HMRC

As noted above, once within the Large Business regime, your business will be assigned a Customer Compliance Manager (CCM) – your key point of contact at HMRC. This relationship is intended to be proactive, open, and based on real-time engagement.

What this means in practice:

HMRC expects transparency and early notification of significant transactions or uncertainties.
There is an emphasis on real-time working – raising potential issues before filing, not after and ideally shortly after they are discovered.
Your CCM will expect access to decision-makers and senior stakeholders in your tax and finance teams. This will become an embedded and important part of their role.
In addition you may be required to publish your Tax Strategy depending on your financial results and international group structure

Pratical implication: HMRC is no longer a distant body to report to once a year – it’s an active participant in your compliance landscape. Building a relationship based on mutual trust and open communication is critical and ensuring finance leaders and Boards are adequately supported by external advisors is crucial.

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Corporate Tax

HMRC is no longer a distant body to report to once a year – it’s an active participant in your compliance landscape.

Michael Spencer

Final Thoughts

Entering the Large Business regime is a defining moment – and brings with it significant new obligations. It’s not just about more paperwork; it’s about embedding strong governance, accountability, and risk management into your tax function and managing key stakeholders – including HMRC.

Our advice to newly classified large businesses

Act early. Don’t wait until the SAO certificate is due or the CCM meeting is scheduled as that is often too late to make any meaningful change before HMRC risk assessments.

Invest in governance. Consider a review or audit of your tax processes and documentation, reach out to external advisors for help and guidance on what good looks like.

Engage your board. Board-level ownership of tax matters is no longer optional – it’s expected. Bring the whole Board along on the journey.