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HMRC internal manual

Tax Compliance Risk Management

Risk Assessment: overview

Risk Assessment is the process whereby particular sources of information such as tax returns are reviewed by HMRC to establish whether there is a possible, specific tax compliance risk for customers who are not Low Risk. The focus and nature of the Risk Assessment should be influenced by the results of the Business Risk Review. For example, if a customer only failed to meet the Low Risk criteria because of their Tax Strategy, Risk Assessment activity should be focused on identifying possible tax avoidance rather than on possible systemic errors. The outcome of the Risk Assessment process is further knowledge to inform the Business Risk Review and, depending on the outcome, an agreed set of priority risks which will be taken forward through Risk Working. There are standard operating procedures (SOPs) for VAT, EC and CT risk assessment which customer teams must follow when risk assessing in any of these regimes.