HMRC have published their response to their consultation on the risk review process for large businesses.
HMRC manage the tax compliance of the largest businesses through the use of the Business Risk Review (BRR), conducted via Customer Compliance Managers (CCMs). Presently, the risk profiles of businesses are assessed and categorised as either ‘low risk’ or ‘non-low risk’, which then determines the approach HMRC will take to their compliance. This consultation sought opinions on whether this system could be improved, and the responses received have now been published, with HMRC identifying a number of potential improvements and next steps.
Most respondents to the consultation thought the existing BRR system worked well, but felt there could be improvements – their comments, and the Government’s responses, are summarised below:
The Government’s response commits to a wider range of risk ratings that distinguish more clearly between high and low risk behaviour, although does not currently state how many ratings there will be.
The Government acknowledges that, while there should be clear advantages and disadvantages of achieving a certain risk rating, all of HMRC’s customers must be on a level playing field. Further investigation in this area will therefore follow.
The Government has confirmed that the enhanced BRR system will take more account of existing tax risk management work required by large businesses, such as SAO and published tax strategies.
The response suggests that a low risk rating should only be provided to large businesses that adhere to the TCF or have similar controls in place.
The enhanced BRR process should support continuous dialogue between the CCM and the taxpayer by providing both parties with a clear set of actions and timelines to be regularly updated and discussed.
HMRC will now conduct a pilot using an enhanced BRR, to run alongside existing BRRs in 2018. Assuming the pilot goes to plan, the enhanced BRR will be rolled out during 2019/20.
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