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Managing tax risks is priority

Business Advisory

By Lisa Knipe, corporate tax associate director

Published 27/09/2016

A review of tax processes and controls is vital
A review of tax processes and controls is vital

In today’s environment, business is no longer just about maximising shareholder return but about being a good corporate citizen. A company’s reputation is critical to its ability to succeed.

Ensuring a strong reputation has moved beyond being ‘nice’ to becoming a fundamental part of business. The scrutiny of tax risk and internal controls has increased vastly and continues to do so. It appears that everyone has now something to say about tax and whether a company pays its ‘fair’ amount.

In today’s environment, business is no longer just about maximising shareholder return but about being a good corporate citizen. A company’s reputation is critical to its ability to succeed. Ensuring a strong reputation has moved beyond being ‘nice’ to becoming a fundamental part of business. The scrutiny of tax risk and internal controls has increased vastly and continues to do so. It appears that everyone has now something to say about tax and whether a company pays its ‘fair’ amount.

Tax regulation forces companies to deal with multiple tax challenges. Larger businesses face the senior accounting officer regime (which no longer has HMRC’s ‘light touch’ approach). They must also comply with the latest requirement to document and publish online a robust tax strategy.

A review of tax processes and controls is vital. This will not only show HMRC the importance you place on your tax function, but well-documented tax processes will contribute to a cut in the overall tax cost of your business, whilst minimising tax risk.

For most companies, a complete tax risk assessment is predominantly seen as an administrative burden and perhaps brings up feelings of dismay over the size of the exercise ahead (without the manpower to do it). Organisations may need a lot of convincing that this can be used to advantage.

There is no denying that a risk assessment will take time and effort. However, once complete, the business should have compiled a unique document library should HMRC have any tax risk queries.

By walking through the organisation’s tax processes from start to finish, new procedures and policies may be written. Once documentation is finalised, increased tax transparency should create genuine benefits such as minimising the risk of penalties, incorrect tax payments and HMRC enquiries.

In my previous role on in-house tax for a large organisation, I experienced most of the above first-hand. Although I started the risk review somewhat reluctantly, as I watched the benefits unfold, I began to question if I could ever have fulfilled my role properly without it. Having worked through a risk assessment and the evaluation of controls around processes, I came out the other side with a totally different attitude. Tax risk management should be on the forefront of a company’s agenda.

*For further information, Lisa Knipe can be contacted at lisa.knipe@ie.gt.com or visit http://www.grantthorntonni.com/

Grant Thornton (NI) LLP specialises in audit, tax and advisory services.

Belfast Telegraph

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