29 October 2022
Depending on who you talk to, a business’s tax contribution is a political hot potato, a moral measure, a social signal – or all of the above. In this environment, tax governance is an increasingly hot topic. It’s not enough to file tax returns on time and calculate liabilities correctly, HMRC also wants to know about businesses’ processes and controls in relation to tax – not just how much, but how?
HMRC’s expectations for tax governance
This is particularly clear for large businesses (generally those with UK turnover of £200m or more) subject to HMRC’s Business Risk Review Plus (BRR+) process.
HMRC says explicitly that it expects such businesses to have a risk register and documented tax controls which are subject to assurance checks and tests. To enforce this expectation, it relies on legislation such as the senior accounting officer (SAO) regime, which is all about the tax controls environment, and the corporate criminal offence (CCO), which requires businesses to have reasonable prevention procedures in relation to the facilitation of tax evasion.
We have seen recent correspondence from HMRC’s CCO team seeking not just information about the prevention procedures that a business has implemented, but also contemporaneous evidence demonstrating that these have been tested.
The problem: tax teams are struggling
Unfortunately, tax has become increasingly complex but tax specialists remain scarce, so that it is not uncommon for corporate groups to have small tax teams of one or two people to juggle hundreds of tax returns a year, covering multiple different taxes. However, many central tax teams responsible for SAO compliance and the BRR+ process may not have responsibility for payroll taxes or even VAT, despite these taxes being squarely within the scope of those regimes.
Our solution: technology
RSM’s solution to the problem of managing tax governance is technology. Specifically, we have developed new bespoke technology solutions on a robust platform already successfully used by our internal audit services teams. The client internal audit teams they support have been wrestling with similar problems for decades: how to provide meaningful assurance with limited resources.
Our RSM Tax InSight software is powered by our Insight4GRC proprietary software, which has been developed and refined by the demands of our internal audit services and other clients for over 15 years. It’s a true software as a service product – there are no license fees, which in turn means that the costs involved are set at a level to suit user needs.
RSM Tax InSight is designed as a live system – in-house tax, finance, and HR professionals can upload draft tax returns for review by senior members of the team, make payment requisition requests if necessary, and input tax information directly. The system then acts as repository for draft and final returns as well as providing a full audit trail showing the review process. It can be used to assess tax governance procedures in any country and in relation to any tax. It is also able to run advanced analytics on any of the information it collects; for example mapping corporate tax rate per country against effective tax rate in that country.
As well as the base system, which is highly customisable, there are two additional modules currently available:
- CT compliance InSight can analyse global corporation tax rates, effective tax rates, and more; and
- Risk InSight provides an interactive risk matrix, which is something HMRC will ask for as part of the BRR+ process, with an extensive and interactive reporting dashboard and mapping facilities to identify and rate the performance of controls built into tax management systems.
RSM Tax InSight has been developed by a team with experience of working in in-house tax departments. We’ve built what we wish we had had at the time, so please get in touch for a demonstration and to find out more.