Research and analysis

Executive Summary: Large Business Survey 2023

Published 30 July 2024

1. Introduction

HMRC has a strategic priority to support more customers to resolve issues quickly and easily, deliver new systems and improved online services and keep the tax gap from widening. HMRC first commissioned the Large Business Survey (LBS) in 2015 to help evaluate whether HMRC’s processes are delivering the intended customer experience and examine views about specific policies from a large business perspective. This report summarises the ninth wave of the LBS (LBS 2023 or W9) with the largest and most complex businesses in the UK.^{[footnote 1]}

The report is based on data from 2 strands of research:

• a quantitative telephone survey with 575 Heads of Tax or Finance Directors from HMRC’s large business customers (representing 33% of the population) that was conducted between 29 August 2023 and 5 January 2024
• a qualitative ‘follow-up’ phase, consisting of 30 in-depth interviews conducted via telephone or Microsoft Teams with respondents from the main survey, that was conducted between 31 January and 1 March 2024

Any significant differences between waves of research have been tested using t-testing and are significant at a 95% confidence interval.

2. Overall customer experience

The majority (81%) of businesses rated their overall experience of dealing with HMRC as ‘good’ in 2023, which is in line with 2022 (81%).

Most businesses that participated in the qualitative follow-up interviews were positive about their relationship with HMRC at an overall level. They appreciated the open relationship they had with HMRC and felt they could approach HMRC with any issues.

However, some felt their working relationship would be improved if they had more contact with or timely engagement from HMRC. This included numerous businesses that reported that they have found it increasingly difficult to get in contact with the appropriate people at HMRC, which they perceived to be down to resource constraints and HMRC staff becoming increasingly overstretched.

Businesses also felt their working relationship would be improved if there was less changeover of staff at HMRC, and if Customer Compliance Managers (CCMs) had more authority to be able to make meaningful decisions without needing to always defer to policy teams.

3. What makes a good experience for large business customers?

Key Driver Analysis (KDA^{[footnote 2]} identified the top 5 areas of service which had the most impact on customers’ overall experience of dealing with HMRC in 2023. The top 5 key drivers of overall experience in 2023 were: ‘HMRC are easy to deal with’ (71% agreed), ‘HMRC actively seek a cooperative relationship’ (86% agreed), ‘HMRC responded in a timeframe that was reasonable from a commercial perspective’ (57% agreed), ‘HMRC are competent in their treatment of the business’ (83% agreed), and businesses’ rating of their overall relationship with their CCM (93% rated this ‘good’).

‘HMRC are easy to deal with’ remained the most important key driver of overall experience of dealing with HMRC in 2023. This has been the top key driver every year since this performance measure was introduced to the LBS in 2021. ‘HMRC actively seeking a cooperative relationship’ was the second most important key driver, having been fifth in 2022, and ‘HMRC are competent in their treatment of the businesses’ remained the fourth key driver (also fourth in 2022). ‘HMRC response times are commercially reasonable’ and the rating of the overall CCM relationship were new key drivers for 2023.

Businesses were generally more positive about each of the key drivers of overall experience when they reported that they had a ‘good’ relationship with their CCM. Having a single dedicated contact was widely reported to make it easier to deal with HMRC because it means the business knows who to get in touch with if they have queries or issues. Businesses also reported that CCMs play a pivotal role in taking ownership of issues to help ensure that HMRC’s response is more co-ordinated. Feedback collected during the qualitative interviews also showed that business perceptions on whether they felt HMRC actively seeks a co-operative relationship with them or not hinges on perceptions of CCM performance.

4. Wider customer experience

Across the wider measures of customer experience, businesses were most likely to be positive about the extent to which HMRC is perceived to treat their business fairly (89% agreed with this performance measure in 2023). They were least likely to agree that there is good coordination across HMRC in relation to their tax affairs (60% agreed in 2023). Scores for each wider customer experience measure were largely consistent between 2022 and 2023.

5. Relationship with the Customer Compliance Manager

Most large businesses (95%) had dealt personally with the CCM responsible for their business in the 12 months before they participated in the LBS 2023. This was in line with the previous waves of the LBS:

Previous waves	Large business (%)
2022	95
2021	93
2020	95
2019	93

Businesses that had contact with their CCM in 2023 were asked to rate their overall relationship with them. Almost all (93%) described the overall relationship with their CCM as ‘good’, including 62% that rated it ‘very good’. A small minority (4%) rated it as ‘neither good nor poor’ and 1% regarded their relationship as ‘poor’. These results are consistent with 2022.

Qualitative interviews showed that the CCM relationship continues to be key to whether businesses believe that HMRC is actively seeking a cooperative relationship with them. Businesses also generally find HMRC easier and quicker to deal with when their CCM is involved. As a result, CCMs continue to be key to how businesses view their overall experience with HMRC. However, some businesses felt that their relationship with their CCM had deteriorated over the last 12 months. They felt this had been caused by resourcing issues at HMRC, changes in HMRC staff and the perception that the power of CCMs to make meaningful decisions has declined over time.

6. Contact with HMRC

Around 9 in 10 (89%) businesses had contacted HMRC in relation to tax issues excluding the routine filing of returns in the 12 months preceding their participation in the LBS 2023. This figure is consistent with that seen in 2022.

More than half (57%) of the businesses that had contacted HMRC agreed that ‘HMRC responded in a timeframe that was reasonable from a commercial perspective’ in 2023. This is a significant increase (though not statistically significant) from 2022, when 51% agreed. Around one in ten (11%) neither agreed nor disagreed with this statement in 2023 (down significantly from 18% in 2022), and around a third (32%) disagreed, which is consistent with 2022 (31%).

Despite an increase in the survey score for this measure, businesses that took part in qualitative follow-ups said that HMRC’s response times could be slow. They reported poor response times were an issue for all types of different matters, including those that businesses considered to be ‘basic’. Some said this meant that some businesses could be increasingly reluctant to engage with HMRC on more complex issues going forward, as they might not be confident that HMRC will be able to help resolve them in a commercially reasonable timeframe.

Most of the businesses that contacted HMRC in relation to tax issues excluding the routine filing of returns in the 12 months preceding their participation in the LBS 2023 were positive about the outcomes of this contact. More specifically:

• 92% agreed that their contact led to the business being transparent with HMRC
• 70% agreed that their contact led to their business having trust in HMRC
• 66% agreed that their contact led to their business having confidence in HMRC

While positive scores relating to transparency and trust were consistent with previous waves, there was a significant increase in the proportion of businesses that disagreed that their contact led to their business having confidence in HMRC between 2022 and 2023 (from 10% to 16%); and there was a significant increase in the proportion that disagreed that their interaction led to the business having trust in HMRC in the same period (from 7% in 2022 to 12% in 2023).

7. Administrative burden

Over 4 in 10 (44%) businesses agreed that the overall level of administrative burden relating to tax compliance was ‘reasonable’ in 2023. Around a quarter (23%) neither agreed nor disagreed and a third (33%) disagreed. The proportion of businesses that disagreed with this statement increased (albeit not significantly) between 2022 and 2023 (from 28% to 33%).

During the qualitative discussions, businesses that did not agree that the overall level of administrative burden relating to tax compliance was reasonable mainly attributed this to the cumulative impact of changes to legislation (both in terms of volume and complexity). Moreover, some felt that the amount of work required to adhere to some legislation was not proportionate. This was specially mentioned in relation to Pillar 2 by several businesses.

Some of the businesses that did not agree that the overall level of administrative burden relating to tax compliance was reasonable also said having numerous unresolved longstanding enquiries with HMRC or being subject to thematic reviews added considerable burden.

8. Business Risk Reviews and the Annual Conversation

The proportion of businesses that underwent a Business Risk Review (BRR+) in the 12 months prior to the LBS increased significantly between 2022 and 2023, from 38% to 57%. Concurrently, the proportion of businesses that had an Annual Conversation decreased significantly (from 37% in 2022 to 31% in 2023), as did the proportion of businesses that had neither a BRR+ nor an Annual Conversation (from 25% in 2022 to 11% in 2023).

Most businesses that underwent a BRR+ were positive about their experience. More specifically, 90% agreed that HMRC worked collaboratively with them, 82% agreed that they were clear on how to improve their risk rating, 87% agreed that the administrative burden of the BRR+ process was reasonable, and 87% agreed that it was clear how HMRC came to the decision about their risk rating.

The scores for these measures increased between 2022 and 2023, including a significant increase to the proportion that agreed that it was clear how HMRC came to the decision about their risk rating, from 79% in 2022 to 87% in 2023.

Some businesses that participated in the qualitative research reported that they went through the BRR+ process for the first time in 2023. Businesses generally reported they found the new BRR+ process (introduced in 2019) to be much clearer than the previous process. They felt that the BRR+ documentation was clear, and that the more granular risk categories and scales made it easier for them to understand HMRC’s decision-making process.

As in 2022, most businesses that had an Annual Conversation in the 12 months prior to them participating in the LBS 2023 were positive about the experience: 94% agreed that it had a positive impact on their relationship with HMRC, and 91% agreed that the Annual Conversation was useful given that their business did not undergo a BRR+.

9. Appetite for risk

Almost all businesses (92%) rated their appetite for boundary pushing tax planning as ‘low’. This was a significant increase from 2022, when 86% rated it as ‘low’. Two-thirds (67%) rated their appetite as ‘very low’, which is also a significant increase from 2022 (61%). A small proportion (7%) rated their appetite as ‘neither high nor low’, which is a significant decrease from 2022 (12%). A minority (1%, equivalent to 5 businesses) said their appetite for boundary pushing tax planning was ‘high’ in 2023, which is consistent with previous waves.

10. Pillar 2

Two thirds (66%) of all businesses said they expected to be in scope of Pillar 2 irrespective of whether any liability will be due, 28% said they were not in scope and 6% were unsure.

Around a quarter (23%) of the businesses that expected to be in scope said they were intending to make changes to their business in response to Pillar 2, two thirds (66%) said they were not and one in ten (10%) were unsure.

This means that 15% of all businesses that participated in the LBS 2023 said they were in scope of, and intending to make changes in response to, Pillar 2.

The qualitative discussions explored the types of changes businesses were intending to make that were not asked about in the survey. Businesses that participated in qualitative discussions generally reported that they would need to make changes to their internal systems and processes in order to demonstrate that top-up tax payments are not due, and to adhere to the reporting requirements going forward. This helps to explain why some businesses said they were intending to make changes in response to Pillar 2, but not the specific changes they were prompted with during the survey.

Businesses tended to report that Pillar 2 would have no or a negligible impact on the amount of UK taxes they pay. However, they said during qualitative interviews that the amount of work required to understand the legislation, demonstrate that they are not required to make top-up tax payments, and the annual reporting requirements bring a considerable amount of administrative burden.

Some businesses said they were still working to understand the full implications of Pillar 2 and any potential ramifications at the time of fieldwork.

11. Plastic Packaging Tax

Around 4 in 10 (38%) of all businesses said they manufacture, import, or use plastic packaging in their supply chain. Of these, 56% said they were liable to register for the Plastic Packaging Tax, which equates to 21% of all businesses that took part in the LBS in 2023. Almost all (97%) of those liable to register for the Plastic Packaging Tax said they had already done so before taking part in the survey.

Over three quarters (77%) of businesses that manufacture, import or use plastic packaging in their supply chain rated their understanding of the Plastic Packaging Tax as ‘good’, including more than a quarter (27%) that rated it as ‘very good’. Predictably, those that were liable to register were more likely to rate their understanding as ‘good’ when compared to those that were not liable to register (85% to 71% respectively).

Around two thirds (67%) of businesses that were liable to register for the Plastic Packaging Tax agreed that HMRC’s guidance on the tax is effective in terms of helping their business to comply with the tax. Around half (48%) of businesses that manufacture, import or use plastic packaging agreed that HMRC’s guidance on the Plastic Packaging Tax is effective in terms of helping them ensure their supply chain is compliant.

Around a third (31%) of businesses that manufacture, import or use plastic packaging agreed that the Plastic Packaging Tax has increased demand for recycled plastic within their business or their supply chain, and similar proportions neither agreed nor disagreed (30%) and disagreed (31%).

12. Super-Deduction

Around 7 in 10 businesses said they had claimed or that they intended to claim the Super-Deduction when they took part in the LBS 2023 (69%). This consisted of 46% that had already claimed at the time of the survey and intended to claim again, 12% that had claimed already but were not intending to do so again and 11% that were yet to claim by the time of the survey but intended to do so going forward.

17% of businesses that had claimed or were intending to claim said that the Super-Deduction had had an impact on their plant and machinery investment decisions between 1 April 2021 and 31 March 2023. Of these businesses, 84% said it had an impact on the timing of investments, 40% said it led to a higher amount being spent on investments, and 12% said that investments that were entirely unplanned were made because of the introduction of the Super-Deduction.

13. Overseas working and social security

Two fifths (40%) of all businesses said that employees on their UK payroll had worked temporarily from another country over the last two years.^{[footnote 3]} Of these, around two fifths (38%) reported that paying social security contributions for employees working abroad was ‘easy’, a quarter (24%) said it was ‘neither easy nor difficult’ and a quarter (26%) reported that they found it ‘difficult’.

Qualitative interviews focused on the experiences of businesses that found it difficult to pay social security contributions for employees working abroad. These businesses said that difficulties often stemmed from inconsistencies between different countries’ rules and regulations. Specifics mentioned included different countries having different tax years, different countries having different definitions of employment (particularly which types of workers are classed as employees or self-employed), and different rules about where social security payments needed to be made from.

Almost half of all businesses reported that they were limiting the number of employees that can work from outside the UK due to social security concerns, including financial or administrative costs (45%).

Businesses that took part in qualitative research said that they were typically limiting overseas working to avoid the complexity and administrative burden of paying cross-border social security contributions. Regulatory frameworks also prevented some staff from working abroad, with rules that staff in some roles need to be working in the UK.

14. Joint working opportunities

Around two thirds (65%) of all businesses that participated in the LBS 2023 had operations outside of the UK. The majority (69%) of these businesses were aware that they can work jointly with HMRC and overseas tax authorities in any capacity. This includes 43% that were aware of Simultaneous Tax Examinations and 35% that were aware of the International Compliance Assurance Programme (ICAP) specifically.

Around a quarter (23%) of all businesses with operations outside of the UK said that they had conducted any joint working with multiple tax authorities. This includes 14% that had taken part in joint working with HMRC and 12% that had taken part in joint working between two other tax authorities not including HMRC.

Three in five (60%) businesses that had taken part in joint working with HMRC agreed that this was beneficial to the business, while 27% neither agreed nor disagreed and 8% disagreed.

Those aware of joint working opportunities with no prior experience of this type of working gave mixed feedback when asked if working with more than one tax authority would be beneficial: 36% agreed that it would, 42% neither agreed nor disagreed and 21% disagreed.

Many (80%) of the businesses aware of joint working opportunities but that had not participated in joint working reported that positive feedback from other businesses that had experience of joint working with HMRC could encourage them to take part in joint working with HMRC in the future. However, feedback from the qualitative interviews showed that businesses would require more information about how such an arrangement would work in practice and what the benefits would be, before agreeing to work with HMRC in that way.

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1. The LBS was first commissioned in 2015 and it was re-contracted in 2018 and 2021. Prior to the LBS, HMRC commissioned the Large Business Panel Survey (LBPS) between 2010 and 2014 which asked some of the same questions, and HMRC have been conducting research with this audience since 2008. ↩

2. A statistical technique used to determine which elements of HMRC’s service were most likely to contribute to a ‘good’ rating of overall experience. This analysis therefore identifies the areas which have the most impact on customers’ overall experience of dealing with HMRC. ↩

3. Temporarily in this context means for less than a year and excludes business trips. Businesses were given this definition during the survey. ↩