HMRC Investigations Into Big Businesses Now Last Years — And Companies Are Feeling the Pressure

HMRC investigations into big businesses have become markedly longer, with many major corporate tax enquiries now stretching across several years. Freedom of Information data analysed by law firm Pinsent Masons shows that open enquiries handled by HM Revenue & Customs’ Large Business Directorate now last about 41 months – nearly three and a half years. The same analysis found that the number of active investigations into companies with annual revenue above £200 million rose from 2,031 to 2,149 in the year to March 2025. HMRC’s scrutiny of large corporations is therefore both broader and deeper, and HMRC investigations into large UK companies now have consequences for business planning, cash flow and the wider UK economy.

What the data reveal about HMRC investigations into big businesses

• HM Revenue and Customs (HMRC) does not publish full data on all large-business enquiries, making precise timelines difficult to determine.
• The most reliable indicators come from transfer pricing and diverted profits tax cases, which tend to be the most complex.
• These cases often involve multinational companies and cross-border transactions, making them slower and more resource-intensive.

Recent statistics (2024–25)

Metric	Latest figure	Previous year
Average age of settled transfer pricing enquiries	41.0 months	33.1 months
Number of cases settled	143	128

HM Revenue and Customs acknowledges that long-running enquiries can create uncertainty for businesses, but says there has been clear progress in reducing the time it takes to close cases recently. It also says that speed won’t sacrifice the correct tax amount. The broader picture reflects a mixed trend: while closed cases are now being resolved more quickly, many open enquiries continue to run for several years. Despite improvements in efficiency, the volume and complexity of cases prolongs the overall timeline for large-business tax investigations.

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Why these investigations take so long

Several structural factors explain why HMRC investigations into large businesses often stretch over several years.

Complex international tax structures

Many enquiries involve multinational groups with complex cross-border arrangements. Transfer pricing disputes, questions around permanent establishments, or the use of overseas subsidiaries require detailed analysis of global transactions. These cases frequently involve cooperation between multiple tax authorities and extensive documentation reviews. As a result, investigations can take considerable time to resolve.

Governance and oversight within HMRC

Large-business tax cases are subject to strict internal oversight. HMRC has adopted a cautious approach following past criticism over corporate tax settlements. Major decisions must pass through several levels of review to ensure they are robust and defensible. While this strengthens accountability, it can slow the pace at which disputes move towards resolution.

A growing compliance workload

The number of enquiries opened into large companies has increased in recent years, reflecting a wider rise in HMRC investigations into large UK companies. HMRC continues to prioritise large-business compliance because these companies account for a substantial share of UK tax revenues. As the volume and complexity of cases rise, investigations naturally take longer to progress through the system.

The nature of corporate tax disputes

Large corporate tax enquiries often evolve into detailed technical disagreements, particularly in complex HMRC tax enquiries for large UK businesses. Companies may challenge HMRC’s interpretation of tax rules, provide additional evidence, or seek clarification through negotiation. This process can involve multiple rounds of correspondence, expert analysis, and sometimes international consultations before both sides reach agreement.

Co-operative compliance challenges

HMRC assigns a Customer Compliance Manager to major groups to maintain ongoing dialogue. In practice, however, differences in interpretation or gaps in documentation can still lead to prolonged discussions. When disagreements arise, reaching a settlement may take significant time, particularly if both parties need to revisit earlier positions.

Business impact

Prolonged investigations carry several consequences for large companies:

• Financial uncertainty: Pending enquiries often involve substantial tax liabilities. HMRC charges late-payment interest on any underpaid tax, currently 7.75%, meaning that protracted cases can significantly increase costs. Businesses may also need to provision for contingent liabilities in their accounts, affecting reported profits and dividend decisions.
• Resource diversion: HMRC tax enquiries for large UK businesses demand significant management time, professional fees and administrative support. According to Pinsent Masons, many of the UK’s largest firms have multiple concurrent enquiries, compounding the burden.
• Reputational and operational risk: Unresolved tax disputes can create uncertainty for investors and may hinder a company’s ability to bid for government contracts or complete corporate transactions. Uncertainty also discourages long‑term investment decisions, undermining the UK’s competitiveness.

HMRC’s response and the policy landscape

HMRC argues that it is making progress in reducing the time taken to close enquiries and that its co‑operative compliance model remains a cornerstone of large‑business tax administration. The NAO report praises the hands‑on approach for doubling the compliance yield and reducing the long‑term tax gap. However, the public debate is shifting towards transparency and accountability. The Public Accounts Committee has launched an inquiry into tax compliance by large businesses, scrutinising how HMRC manages its caseload and whether current governance structures strike the right balance between efficiency and fairness.

The government’s 2021 Review of tax administration for large businesses recognised that timeliness is a key concern and committed to further embedding co‑operative compliance. Meanwhile, HMRC’s transfer‑pricing statistics show that staffing levels for international tax remain relatively static at 392 full‑time equivalent specialists. Unless resources increase in line with caseloads, the average age of enquiries may continue to creep upwards.

Practical steps for large businesses

While companies cannot control HMRC’s internal processes, they can take steps to reduce the risk of drawn‑out disputes:

• Strengthen tax governance: Boards should ensure that tax policies are documented, risks are identified and escalated, and there is clear oversight from the finance and audit committees. A robust governance framework helps resolve issues quickly when HMRC asks questions.
• Engage early with HMRC: Proactive disclosure through real‑time working or the Profit Diversion Compliance Facility can pre‑empt formal investigations and demonstrate a willingness to co‑operate.
• Maintain thorough documentation: transfer pricing positions, transaction analyses, and internal policies should be well-evidenced and updated. Poor documentation is a common cause of delays. Detailed records also facilitate the negotiation of advance pricing agreements, which provide certainty but still take around 44 months to agree.
• Monitor emerging policy: The Large Business Directorate’s success means HMRC is considering extending the close‑contact approach to other complex or high‑risk businesses. Medium‑sized groups should prepare for similar scrutiny.
• Seek professional advice: Specialist advisers can help interpret HMRC correspondence, gather evidence, and negotiate settlements. Early intervention often reduces the lifespan of enquiries.

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How Apex Accountants & Tax Advisors can assist

Navigating an HMRC investigation is both a technical and a strategic challenge. Apex Accountants & Tax Advisors support large businesses at every stage of the process. Our services include:

• Risk assessments and governance reviews: Evaluating existing tax controls against HMRC expectations and best practice to identify potential triggers for enquiry.
• Documentation and transfer‑pricing support: Preparing robust transfer‑pricing reports and documentation that stand up to HMRC scrutiny and align with international guidelines.
• Dispute management: Representing clients in correspondence and meetings with HMRC, helping to narrow issues and achieve timely resolution. Where appropriate, we can assist with Advance Pricing Agreements or mutual agreement procedures to secure certainty.
• Strategic advice on co‑operative compliance: Advising on whether to join HMRC’s Profit Diversion Compliance Facility or other disclosure programmes, balancing transparency with commercial considerations.
• Training and ongoing compliance: Providing training for finance teams on record‑keeping, risk management and responding to HMRC queries. We can help design procedures to monitor tax positions across the group.

For tailored support and to minimise the impact of long‑running HMRC enquiries on your business, contact Apex Accountants today to arrange a confidential consultation.

FAQs

What is the average duration of an HMRC investigation into large businesses?
Recent FOI data indicate that open investigations into the UK’s largest companies last around 41 months (about three and a half years). HMRC’s own statistics show that the average age of settled transfer‑pricing enquiries is also around 41 months.

Why do HMRC investigations take so long?
The main drivers are the complexity of international transactions, limited specialist resources, layered governance processes and the sheer volume of cases. Transfer‑pricing disputes require coordination with other tax authorities and often take years to resolve.

How many large‑business investigations are open?
Data from HMRC’s Large Business Directorate show that there were 2,149 open investigations at the end of the 2024‑25 year, up from 2,031 a year earlier.

Does HMRC publish data on investigation length?
HMRC publishes limited statistics. The Transfer Pricing and Diverted Profits Tax statistics report includes the average age of settled enquiries. FOI responses obtained by Pinsent Masons provide further insight into the average age of open enquiries.

How can businesses reduce the duration of an HMRC enquiry?
Companies can reduce delays by keeping comprehensive documentation, engaging proactively with HMRC through their Customer Compliance Manager, addressing queries promptly and considering advance pricing agreements for complex transfer‑pricing issues. Professional advice can help streamline the process and avoid pitfalls.

Could HMRC’s close‑contact model be extended beyond large businesses?
Yes. The NAO reports that HMRC is exploring whether to apply the Large Business Directorate’s hands‑on approach to other complex or high‑risk businesses. Medium‑sized groups should monitor developments and prepare for increased engagement with HMRC.