Tax compliance risk management process for customers managed by Mid-sized Business: role of the Mid-sized Business Customer Engagement Team (CET) or Caseworker
Whenever the Mid-sized Business Customer Engagement Team (CET) or Caseworker engages with a qualifying company they must encourage the company to work with HMRC to deal with risks to tax compliance openly, co-operatively and where possible in real time.
As part of their engagement activity the CET or Caseworker must try to understand the customer’s business and the overall level of tax risk the customer represents. This includes understanding whether the tax accounting arrangements are appropriate. So the CET or Caseworker must talk to the customer about
- how it identifies key risks to tax compliance and
- the approach it takes to control such risks within the business.
As part of any ongoing discussions about business systems, governance and risk the CET or Caseworker should
- discuss with the company any areas of uncertainty about the operation of the Senior Accounting Officer (SAO) provisions, and
- make sure that the SAO is aware of the date by which a certificate must be provided for a financial year, and
- make it clear that the accounting arrangements should allow the tax liabilities to be calculated accurately in all material respects.
The CET or Caseworker must not give any assurance that the tax accounting arrangements of a company do allow the tax liabilities to be calculated accurately in all material respects. However, if the CET or Caseworker identifies any area that would prevent this being the case then they must draw it to the company’s attention. This is not to say that at this point the SAO may already have failed in the main duty, see SAOG14000.
The CET or Caseworker should review any certificate that an SAO provides, see SAOG17600, and consider this as part of the risk assessment process of the company.
We expect there to be strong compliance with the SAO provisions, by both companies and their SAOs. However, if there is a qualified certificate or if a problem with the tax accounting arrangements is identified as a result of wider compliance work, the CET or Caseworker must consider whether there has been any failure to comply with the SAO provisions by the company or its SAO. If, exceptionally, there has been a failure, the CET or Caseworker must consider the potential penalty position.