Consultation: The Business Risk Review process - KPMG United Kingdom
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Consultation: The Business Risk Review process

Consultation: The Business Risk Review process

HMRC have published a consultation on their process for risk profiling large businesses.


Tax Director

KPMG in the UK


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As part of the tax compliance risk management process for the UK’s largest businesses (generally speaking, those with annual turnover of more than £200 million), HMRC’s Customer Relationship Managers (CRMs) carry out periodic Business Risk Reviews (BRR) to assess each large business’s risk profile. This helps inform how much scrutiny the business and its tax affairs will receive from HMRC. The BRR process was introduced ten years ago and has been largely unchanged since. HMRC are conducting a consultation on the operation of the BRR process and how it might be improved.

The key suggestion in the consultation is a move from the current binary risk rating of large businesses as either ‘low risk’ or ‘non-low risk’. The current approach is criticised for not allowing for differentiation between the range of tax risk management behaviour demonstrated by large business and also a lack of clarity on what ‘benefit’ there is to being rated as ‘low-risk’.

One proposal is to change to four or five discrete risk categories – for example low risk, low-moderate risk, high-moderate risk, high risk and significant risk. Alternative proposals include an approach similar to the Australian Tax Office which assesses the impact and likelihood of certain risks, or introducing a nine box grid or distributed approach where large businesses are ranked according to their risks and behaviours.

The intended result of each of these proposals is to allow a variety of risk behaviours in taxpayers to be distinguished, and acknowledged in the way that HMRC will interact with large businesses depending on where they sit on the compliance spectrum. Among other things the document raises the possibility of HMRC providing additional support for low risk businesses, for example by offering quicker clearance procedures.

In addition to the mechanics of awarding risk ratings the consultation asks questions on broader topics including the frequency of review, changes to the current inherent and behavioural risk factors, the approach to tax planning, practical application of tax risk governance procedures, risk ratings specific to particular taxes, and the potential requirement for low risk businesses to have implemented a comprehensive Tax Control Framework.

All businesses affected by the BRR process are encouraged to respond to the consultation which closes on 6 December 2017.

For further information please contact:

Kevin Elliott

Chris Davidson

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