In a little-noticed announcement the Government has indicated that it will consult on its process for risk-profiling large businesses.
Commenting on this, Robin Walduck, Tax partner at KPMG in the UK, said:
“The current process involves an annual Business Risk Review. Those that pass a binary test that asks whether they meet a published standard are awarded a low-risk rating which means HMRC relies on the business to flag up any issues that need discussing. In effect HMRC trusts the business to do its own risk assessment.
“This system was designed a decade ago to allow HMRC’s resources to be directed towards high-risk businesses. But the reality is that in 2017 very few large businesses are engaged in high-risk activity. This means there is a danger that HMRC could find itself badging nearly all large businesses as low-risk. This is clearly not sustainable – it would be politically unacceptable and no longer makes sense operationally for HMRC.
“What will replace the current process and whether there will be a link to the introduction of Making Tax Digital for larger businesses remains to be seen.”
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