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HMRC introduced their updated Business Risk Review (BRR+) process in October 2019, primarily to leverage its ability to influence taxpayer behaviour to adopt a lower risk approach to managing their UK tax affairs, as well as looking to more accurately reflect the risk profile of taxpayers. This will allow them to better target its resources to those taxpayers who represent greater risk.

Below is a short recap of the key BRR changes, impacts and what taxpayers should be focusing on now.

What are the key changes?

  • Move from binary low risk/non-low risk ratings to a broader rating scale of low, moderate, moderate-high and high risk with specific ratings for individual taxes;
  • Explicit consideration given to compliance with other requirements: SAO, Tax Strategy, CBCR, and where appropriate Banking Code of Practice;
  • Increased expectations in respect of documentation and testing e.g. documented risk registers, tax policies and procedures in place, available to share with HMRC and subject to testing; and
  • Explicit consideration of CCO – business regarded as not having appropriately responded to CCO legislation will automatically be assessed as High Risk.

Potential Impacts

  • Raised level of expectation from HMRC, in particular with documentation, resulting in additional challenges;
  • Increased benefits of being low risk;
  • Increased consistency for CCMs and Customers; and

What should taxpayers focus on now?

  • Do current tax governance and risk management arrangements adhere to OECD and other recognised guidance on Tax Control Frameworks and ensure SAO, CbCR, Tax Strategy and Banking Code obligations are met?
  • Are appropriate tax policies, procedures, and risk registers in place and documented?
  • Can understanding of potential liability under CCO legislation, steps taken to profile and manage risks and steps taken to address those risks be evidenced?
  • Are clear accountabilities, up to and including the Board, for tax compliance risk and tax planning in place?
  • Are sufficient resources in place to deliver all tax obligations - systems, people and processes - both within the tax function and those other areas of the organisation that impact on tax processes?
  • What level of assurance checks and testing are carried out in respect of documented tax risks, policies and procedures?

It is important to understand the expectations under the new requirements and where HMRC would rate your current approach to tax governance on their risk profile spectrum. HMRC are committed to making it increasingly attractive to be demonstrating low risk behaviours. Therefore, certain areas of tax governance may require updating or assistance required to ensure you can articulate the positive behavioural attributes of your organisation’s approach to managing tax. For more information please do get in touch with your usual PwC contact or Becky Rodwell, details below. Please also see our dedicated webpage

Becky Rodwell
Director, Tax Reporting & Strategy
Mobile: +44 776 0298 148