Do you know where the tax risks are in your business?

13 Nov 2020

Published in: Member News

Do you know where the tax risks are in your business?

Do you know where the tax risks are in your business?

With the on-going coronavirus pandemic there has been an even greater emphasis on the processes and controls in place to ensure good tax governance across businesses. National audit, tax, advisory and risk firm Crowe, has developed a free Tax Integrity Scorecard to help businesses understand their UK tax risks and assist them in prioritising where to focus their resources to guard against unexpected tax costs, adverse publicity and to improve tax process efficiencies.

Rob Gunn, corporate tax partner at Crowe’s Midlands office said: “Many large and owner managed businesses across the region are increasing their focus on tax governance; the emphasis is now on ‘how’ tax compliance is dealt with and making sure the right amount of tax is paid at the right time. Additionally, ensuring that there is tax integrity within your business is now critical and reflects the wider changing climate in which businesses and tax advisors now operate.”

Tax has also become a reputational risk to businesses. Organisations now operate in a world where tax is considered a moral issue and is front page news. Consequently, many boardrooms and owner managers are focused on making sure they do not face negative publicity from their tax affairs.

Simon Crookston, corporate tax partner said: “There will be continued and increased scrutiny by the media of the taxes paid and claims made by companies in the wake of the COVID-19 pandemic and the punitive measures being taken by HMRC to challenge tax evasion and difficult economic times.”

Over the last few years HMRC’s powers have increased with the introduction of new information and data gathering powers and with the greater use of technology to identify those people and organisations who are understating and underpaying their tax liability.

As well as receiving information from overseas tax authorities, HMRC’s Connect Computer System draws huge amounts of data and information from numerous sources including tax records, online platforms, social media information, government departments and websites, bank data and web browsing information to build up a complex ‘tax picture’ on organisations and individuals.

With such a rich source of data HMRC has the ability to evaluate and determine if there are inconsistencies in the tax information which is declared as part of return filings.

Crookston said: “If you are considering or trying to identify your businesses tax risk, a starting point is to consider the main tax areas of your business (these are typically corporate tax, VAT, employment tax and international matters) and to undertake a high level risk review of these areas.

This can be done by way of a manual review or by the use of a technology tool, such as a Tax Integrity Scorecard, to provide an assessment of the level of tax risk from low - high in each tax area.

Using Crowe’s free Tax Integrity Scorecard, you answer a quick questionnaire that only takes a few minutes to complete and once completed you will receive a PDF report highlighting the level of risk in each tax area.

These risk areas can then be proactively considered and further investigated by the business.

For more information on Crowe’s scorecard visit https://www.crowetaxintegrity.co.uk/

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