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Business Risk Review: Preparing for the new approach

The updated Business Risk Review (BRR+) process, for large businesses with a Customer Compliance Manager (CCM), came into force in October 2019. The intention remains to encourage taxpayers to adopt a lower risk approach to managing their UK tax affairs. 

Alongside understanding the business’ landscape, the new regime focuses on evaluating risk in three key areas; Systems and Delivery, Internal Governance and Approach to Tax Compliance for each tax regime. The outcome of these reviews is ranked into one of four risk categories, according to the extent a business can demonstrate it meets certain low risk indicators.

Other changes to the process include:

  • a more objective risk assessment process, 
  • increased attention on the evidence needed to meet “low risk indicators”,with specific consideration to Senior Accounting Officer (SAO), Corporate Criminal Offence (CCO) and the tax strategy of the business, and,
  • a broader range of benefits for taxpayers who are deemed low risk. 

A low risk rating brings peace of mind and confidence in your tax compliance. At the other end of the spectrum, the potential risks of getting things wrong include reputational risk and financial penalties, as well as the time cost of remediation and inevitable further scrutiny from HMRC.

With the world of tax compliance becoming ever more complex through increasing digitisation and regulatory requirements, HMRC’s expectations have also increased. Their sharper focus on tax governance, combined with growing external pressures and operational challenges in ensuring all tax obligations are fully satisfied is creating a more challenging environment for taxpayers. Taxpayers need to respond by determining whether they have the appropriate systems, processes and resources in place to deliver their tax obligations within a robust governance framework and effective control environment.

What we're seeing in practice

Whilst COVID-19 significantly reduced the number of BRR+ reviews there has recently been a significant increase in the number of meetings taking place, with many more being scheduled throughout the rest of the year.

Some of the key examples and experiences we have from supporting Groups through their BRR+ process include:

  • It is now more challenging to achieve the low risk status. There is a far greater requirement to produce evidence that appropriate governance and controls are in place across a range of tax processes.
  • HMRC are explicitly requesting evidence of review and testing of controls and they expect Internal Audit functions to be used.  
  • System questionnaires are being used to gain greater insights, audit specialists are being brought in and documentation covering a range of processes and controls is being reviewed in detail. 
  • CCMs have received specific CCO training to knowledgeably enquire how CCO obligations are being met.
  • HMRC are frequently using the tax strategy as a basis for their conversations, seeking to understand how a business is delivering the statements made in its tax strategy on a day-to-day basis.

To meet HMRC’s changing requirements, Groups are implementing the latest generation of workflow technologies that allow tax risk monitoring to be embedded within workflow management.  This allows risks to be linked to specific processes and controls within workflows, so that evidence of control delivery or failures are automatically captured in real-time. 

How we can help

Working with your business, we will draw on and share our experience to help you prepare for your BRR+ process. Our approach is collaborative giving you the flexibility to find the solution that’s right for your organisation. Specific examples of how we can help include:

  • High level review of tax governance – utilising PwC’s Tax Management Maturity Model to review the status and relative maturity of your tax function, tax control framework and overall tax governance across your organisation.
  • BRR readiness desktop review – we will carry out a desktop risk assessment working through each of the low risk indicators highlighted by HMRC, outlining any immediate areas of concern or where remediation may be required.
  • Risk and control review – We can support you in the update, build out and documentation of policies, procedures and controls to support you in demonstrating to HMRC that you maintain documented tax policies and procedures which can be shared with HMRC on request.
  • Review of specific areas/sets of rules – We can conduct detailed/deep dive reviews in respect of specific rules or regulations including SAO, CbCR and CCO.
Our work is enabled by the latest technologies to analyse your tax profile and identify particular areas where HMRC are likely to raise questions. Plus the latest operational risk and control tools to embed good governance and evidence of proactive risk management within your day-to-day processes and controls.

Contact us

Becky Rodwell

Becky Rodwell

Director, Tax Reporting & Strategy, PwC United Kingdom

Tel: +44 (0)7760 298148

Emmet Bulman

Emmet Bulman

Director, Financial Services Tax, PwC United Kingdom

Tel: +44 (0)7483 417209

Ray Farnan

Ray Farnan

Partner, PwC United Kingdom

Tel: +44 (0)7808 105769

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