Hawsons have worked with many Large Businesses and International groups over the years so that they can introduce the appropriate systems and procedures and achieve “low Risk status” with HMRC. Part of this process has been to liaise between the Businesses and HMRC to resolve areas of uncertainty, immaterial or isolated errors. When handled correctly, the Business Risk status can be unaffected.
For several years now Large Businesses have been subject to increased scrutiny from HMRC as they have larger tax liabilities. To formalise this process the Senior Accounting Officer regime was introduced that required large businesses to have enhanced reporting, to confirm that their accounting systems could identify, report and pay the correct amount of tax at the right time. Following a review of each business HMRC assigned them a low risk status or non low risk. The benefit of low risk status is that HMRC tended to rely on the company to report and pay tax correctly and did not need constant monitoring. Non low risk businesses in comparison, tended to have more involvement from HMRC in the form of enquiries and interventions.
What is the purpose of this update?
From 1 October 2019 HMRC will be updating the Business Risk Review Process to an enhanced version named BRR+. The rating system will change from binary low or non-low risk ratings to using 4 new ratings – low, moderate, moderate-high, and high.
HMRC have decided to make the review process more visible and consistent. This will be by enabling customers to understand why their business risk assessment has arrived at the particular outcome. The Business can then take the appropriate steps if they want to change to a low risk rating.
A lot has changed in legislation and business since the BRR process was first announced. Therefore, HMRC want to be clearer and more consistent about the BRR process. They have produced clearer guidelines and have developed a different approach for a deeper understanding of customers and sectors. Such as understanding and working collaboratively with each customers business and differentiating between behavioural, inherent, and structural risks.
The new BRR+ process will include:
- Replacing the rating system from binary low or non-low risk ratings to using 4 ratings – low, moderate, moderate-high, and high.
- The introduction of customer behaviour assessments across three areas. These include Systems and Delivery, Internal Governance and Approach to Tax Compliance which determine risk ratings.
- Determining what is low risk for the three behaviours.
- In each tax regime they will reach a risk rating and share them with customers.
- Providing detailed guidance on a new BBR template to record risk ratings.
HMRC’s guidance on the new BRR+ process can be found here click here.
How we can help?
Hawsons have been working with several Large Businesses to highlight and work with the new rules, including how to deal with HMRC on immaterial and isolated errors that all businesses can make but which does not affect the Business Risk status. We can guide you through the process to understand and achieve low risk status. If you would like assistance on this, book your free initial meeting here or telephone your local Hawsons office.
If you would like to see more about our large companies services click here.
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