HMRC has introduced a revised business risk review process for large businesses, with effect from 1 October 2019. The new process will help HMRC to focus its compliance resources where there is the greatest risk of businesses not paying the right level of tax, and encourage businesses to reduce their risk profile with HMRC.
The new approach - known as ‘business risk review+’ (BRR+) - expands the number of risk categories from simply ’low risk’ or ‘non-low risk’ into a broader range of four risk categories:
low;
moderate;
moderate-high; and
high.
HMRC has condensed from seven into three the key areas for risk assessment. These are:
systems and delivery;
internal governance; and
approach to tax compliance.
These assessments will take place against a background review of ‘business landscape’. While not forming part of the scoring process, this will cover:
size, scope and depth of business and tax interests;
complexity of international structures and financing; and
the degree and pace of change within the business.
BRR+ will enable customers to understand how their risk rating has been arrived at and provide a clearer understanding of the actions and timeline required to reduce the level of risk, HMRC says.
Details of the revised process are set out in HMRC's Tax Compliance Risk Management Manualat TCRM3000 onwards. HMRC's guidance confirms that all businesses, no matter how large and complex, ‘are capable of being classified as low risk if they mitigate these risks by meeting the behavioural indicators for systems and delivery, internal governance and approach to tax compliance’. See bit.ly/2nWIClB.
Jo Wakeman, director of Large Business at HMRC, said: 'We subject large businesses operating in the UK to an exceptional level of scrutiny – actively investigating half of them at any one time. Through this work and challenging contrived arrangements we brought in an additional £10bn from large businesses last year.
'Business risk reviews support us in maintaining a shift in companies’ behaviour towards greater tax compliance. We believe the new rating system will clearly set out the actions large businesses need to take in order to reduce their risk ratings and improve their compliance.”
HMRC has introduced a revised business risk review process for large businesses, with effect from 1 October 2019. The new process will help HMRC to focus its compliance resources where there is the greatest risk of businesses not paying the right level of tax, and encourage businesses to reduce their risk profile with HMRC.
The new approach - known as ‘business risk review+’ (BRR+) - expands the number of risk categories from simply ’low risk’ or ‘non-low risk’ into a broader range of four risk categories:
low;
moderate;
moderate-high; and
high.
HMRC has condensed from seven into three the key areas for risk assessment. These are:
systems and delivery;
internal governance; and
approach to tax compliance.
These assessments will take place against a background review of ‘business landscape’. While not forming part of the scoring process, this will cover:
size, scope and depth of business and tax interests;
complexity of international structures and financing; and
the degree and pace of change within the business.
BRR+ will enable customers to understand how their risk rating has been arrived at and provide a clearer understanding of the actions and timeline required to reduce the level of risk, HMRC says.
Details of the revised process are set out in HMRC's Tax Compliance Risk Management Manualat TCRM3000 onwards. HMRC's guidance confirms that all businesses, no matter how large and complex, ‘are capable of being classified as low risk if they mitigate these risks by meeting the behavioural indicators for systems and delivery, internal governance and approach to tax compliance’. See bit.ly/2nWIClB.
Jo Wakeman, director of Large Business at HMRC, said: 'We subject large businesses operating in the UK to an exceptional level of scrutiny – actively investigating half of them at any one time. Through this work and challenging contrived arrangements we brought in an additional £10bn from large businesses last year.
'Business risk reviews support us in maintaining a shift in companies’ behaviour towards greater tax compliance. We believe the new rating system will clearly set out the actions large businesses need to take in order to reduce their risk ratings and improve their compliance.”
