HMRC is to pilot a new version of its Business Risk Review (BRR) process for the risk assessment of large businesses, after a consultation indicated there need to be more gradations of risk and closer dialogue between companies and the department
Following a three month consultation at the end of last year, which saw responses from the Big Four, a number of industry and professional services organisations and companies including Sky, BT, Aviva, Balfour Beatty and Gazprom, the government has published a summary of the outcomes.
These show that most respondents thought that the existing BRR works well, but there were several suggestions about how HMRC could improve the process. These included increasing the number of risk categories, taking more account of the tax risk management work already required by large businesses, more clarity on the advantages and disadvantages of classification into particular risk categories, and continuous dialogue between HMRC’s customer compliance managers and companies on reducing tax risks.
Most respondents (80%) argued the current binary low risk/non-low risk classification is often too narrow to reflect the differences across the large business population and should be expanded to between three and five categories, with more frequent HMRC reviews of those with the highest risk rating.
Most also thought that the BRR process should take more account of the tax risk management work already required of large businesses, such as the senior accounting officer (SAO) provisions and the publication of tax strategies, and should focus on specific risk regimes or areas.
Respondents felt the BRR process as a whole should be more interactive and iterative, and prompt continuous dialogue on reducing risk, while there should be clear advantages and disadvantages of being assessed in each risk category.
HMRC says it will now develop a new version of the BRR that will reflect some of the proposals raised in the consultation, with the intention of piloting later this year across a defined group of companies. The pilot will run alongside existing BRRs, minimising disruption. As long as the pilot delivers the desired outcomes, the improved BRR will be rolled out in 2019 to 2020.
Large Business compliance – enhancing our risk assessment approach (summary of responses) is here.
Report by Pat Sweet
