Response to the HMRC consultation on business risk review

Thu 29 Mar 2018

Following consultation on its large business risk review (BRR) programme, HMRC has commented in the response document that it will develop a new version of the BRR reflecting some of the proposals from that consultation. The new version will be piloted later in 2018 with a defined group of businesses, alongside existing BRRs. As long as the pilot delivers the desired outcomes, the improved BRR will be rolled out in 2019 to 2020.

The main conclusions from HMRC’s perspective from the consultation were:

• The BRR can be enhanced;
• The risk rating categories should be increased from the existing two (non-low risk and low risk) so that it accurately reflects the differences across the large business population;
• The enhanced BRR process should take more account of tax risk management work already undertaken by large business, such as Senior Accounting Officer compliance and the publication of tax strategies;
• The enhanced BRR should provide businesses and HMRC with a clear set of actions and timelines, to be regularly updated and discussed between the parties;
• There should be clear advantages and disadvantages from achieving a certain risk rating, but a level playing field for all businesses is a pre-requisite.  Further work is to be undertaken to make the application of BRR more standardised.  HMRC comment that a low risk rating should only be available where the business adheres to the OECD’s tax control framework or has similar controls in place.

The OECD’s tax control framework (TCF) has six elements:

• An established tax strategy;
• A TCF embedded in the businesses day to day operations;
• Accountability for the tax control framework should be clearly recognised and properly resourced;
• The governance process should be documented;
• Compliance with the TCF policies and procedures should be regularly monitored, tested and maintained;
• The TCF should provide assurance to stakeholders that the tax risks are subject to proper controls and outputs such as tax returns can be relied on.

Large businesses should already be taking account of HMRC’s BRR programme in their general approach to compliance, how they interact with HMRC and how this is reflected in their published material where relevant. For a further discussion of BRR, publishing a tax strategy, compliance with senior accounting officer rules, country by country reporting, or other tax compliance and reporting matters, please get in touch with a member of the Mazars corporate tax team.