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

Date: 30/10/2020
Author: Lesley Jones
Company: Crowe U.K. LLP

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 tool – the 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.

Lesley Jones, Corporate Tax Director at Crowe’s Manchester 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 concluded: “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 and to, and to undertake a high level risk review of them; these areas are typically corporate tax, VAT, employment tax and international matters. This can be done by way of a manual review or by the use of an online tool, such as a Tax Integrity Scorecard, to provide an assessment of the level of tax risk from low to high in each tax area.

Crowe’s free Tax Integrity Scorecard helps you to answer a few core questions in just a few minutes and you will receive a bespoke PDF report highlighting the level of risk in each tax area of your business. These risk areas can then be proactively considered and further investigated by the business.

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