HMRC has been consulting on changes to the way it deals with the tax affairs of large businesses. One of the aims of this, of course, is to ensure that large businesses pay the right amount of tax. No reasonable person can disagree with that objective.
However, we are concerned that HMRC may be building up unrealistic hopes as to the amount of extra tax this might yield. A recent survey was aimed at the 2,100 largest businesses in country. The existing approach of allocating a Customer Relationship Manager to each of these businesses seems to be succeeding, with 80 per cent of large businesses reporting that the system works well. While HMRC clearly think that there is more to do, we remain unconvinced that the majority of the steps being proposed by HMRC will make any difference to the non-compliant large businesses. However, we are concerned that the proposals would have an adverse impact on the compliant majority.
In our opinion, companies who are already getting it right do not need any additional burdens.
Here are the following key points:
- On the proposed requirement for large companies to publish a tax strategy, RSM believes that this is unnecessary. Our view is that an alternative approach of requiring large businesses to publish their HMRC risk rating in their annual report and statutory accounts should be considered. This would be unambiguous, objective, factual, not open to subjective interpretation and would require no further work by the companies.
- On the proposal to introduce a 'special measures' regime targeted at large businesses which persist in undertaking aggressive tax planning, we believe that HMRC should focus its resources on the super-high risk businesses assessed to be extremely non-compliant and which could be subject to this regime.
- At a time when HMRC is short of resources, surely it would be better to focus on obvious risk areas rather than impose burdens on all large businesses, whether they are compliant or not?