TCRM2500 - Managing our relationship with large business customers: Working with customers who are not Low Risk

We recognise that customers who are not Low Risk (Moderate, Moderate - High or High Risk) cover a wide spectrum of tax compliance behaviour. Some may want to work with us in an entirely open and transparent way and seek to manage their tax risk effectively through their systems and processes but may take a stance on tax planning which HMRC believes is inconsistent with Low Risk; others may choose to minimise the investment they make in their tax accounting arrangements with the result that they cannot be relied upon to produce accurate tax return figures and/or may not want to work in real time with us. These different behaviours create different types of risk and we will ensure that our response to these risks is proportionate and appropriately focused. In all cases, we will aim to develop an open and collaborative relationship with the customer as we believe this is the best way of managing tax compliance risk with large business customers. The benefits for customers who choose to work with us in this way is that they will have more certainty about their tax position at any given time and will be able to plan the resource they put into dealing with tax enquiries.

In general, customers we regard as not Low Risk can expect more regular Business Risk Reviews. For those customers who represent the greatest risk it is likely that several meetings will be necessary each year, with full annual Business Risk Reviews. These customers can also expect more HMRC-initiated interventions. If we are not confident that significant issues are being brought to us or we are not getting full information, we may need to undertake more regular analysis and checking of our own. We aim to work with these customers as issues arise and to target our resources on the most significant tax issues so that we get to their heart more quickly, if the customer has not worked with us collaboratively up to that point, it may be less easy to provide certainty in the timescales they might want. We may need to undertake more regular systems reviews and require more comprehensive analysis. It is more likely that we will want to test information submitted with a formal clearance application.

Where we believe that a customer is either not managing tax compliance risk adequately or takes a position which, because of its innovative nature and/or its intended tax effect, represents a significant risk, we will deploy the full range of specialist resource across HMRC and work intensively with the customer to enable rapid reduction in their risk profile. We will increasingly do this in real-time, using our information powers, if appropriate, to drive the process.

For customers who are not Low Risk the Tax Compliance Risk Management process therefore involves all of the following steps:

  • Understanding the Customer
  • Completing the Business Risk Review (BRR+)
  • Risk Assessment activity
  • Risk Working
  • Reviewing the Business Risk Review (BRR+)