In the Autumn of 2017, HM Revenue & Customs (HMRC) conducted a consultation on their Business Risk Review (BRR) process.
The BRR is a core feature of how HMRC manages the tax compliance of largest businesses. Customer Relationship Managers currently conduct a periodic BRR of each large business, assessing their risk profile and categorised as either ‘low risk’ or ‘non-low risk’, which then determines the level of scrutiny and resource the business receives from HMRC.
The process has undergone limited change since its introduction 10 years ago, so the government on a consultation seeking opinions on whether this system could be improved, the responses of which have now been received and published.
Whilst most respondents felt the existing BRR system worked well, some felt there could be improvements. Most notably, the views were that the BRR should:
– classify customers across an increased number of risk categories,
– take more account of the tax risk management work already required by large businesses,
– prompt continuous dialogue between HMRC’s Customer Compliance Managers (CCM) and their customer on reducing tax risks, and
– clearly set out the advantages and disadvantages of being classified in a certain risk category.
The consultation also raised potential risks and concerns around implementing these changes, which will require further research and investigation.
HMRC says it will now conduct a pilot using an enhanced BRR, which will run alongside existing BRRs for most of 2018. As long as HMRC feels that the pilot meets its desired outcomes, the enhanced BRR process will be rolled out across all sectors during 2019 to 2020.
For further information and to discuss how the issues raised in this consultation may affect you and your business, contact your usual Beavis Morgan Partner.
Read the report in full: Large Business compliance – enhancing our risk assessment approach (summary of responses)