New HMRC guidance – time for mid-to-large businesses to review tax risk and strategy

New guidance has recently been published aimed at helping taxpayers ensure that documents, including tax returns, submitted to HMRC are correct and complete.

While the guidance is framed broadly, it has clear implications for mid-to-large businesses, particularly those subject to Senior Accounting Officer (SAO) obligations and Business Risk Review (BRR+) processes. This is a timely opportunity for organisations to review their tax governance frameworks, ensure filing processes are robust, and consider whether their tax strategy should be updated.

Understanding the new guidance for compliance

HMRC’s latest publication in its guidance for compliance (GfC) series is Help ensuring documents filed with HMRC are correct and complete – GfC13. The guidelines are designed to help taxpayers understand HMRC’s expectations, particularly in areas where errors are common or where obligations may be misunderstood. There is no obligation to follow the guidelines but doing so may reduce the risk of HMRC opening an enquiry, or having to pay additional tax, interest and penalties. Taxpayers remain responsible for self-assessing in line with the law and HMRC may still check returns where approaches described in GfC have been adopted.

GfC13 focuses on the importance of submitting documents that are both accurate and complete. It applies to all taxes and in respect of both tax returns and any other document or lodgement given to HMRC with a declaration that it is correct and complete to the best of the taxpayer’s knowledge. While GfC13 doesn’t introduce new legal obligations, it reinforces HMRC’s view of what steps you should take to ensure that you can declare that documents and returns being submitted to HMRC are correct and complete, both in terms of facts and the law.

HMRC expect the guidelines will help if:

• You’re considering applying a novel interpretation of the law (which HMRC considers to be one that a court or tribunal has not considered),
• You’re considering applying an improbable interpretation of the law (which HMRC considers to be one that it’s unlikely the courts and tribunals would agree with), or
• You’re still uncertain of the correct interpretation of the law despite trying to resolve the uncertainty.

The guidelines include practical examples of novel and improbable interpretations of the law and legal uncertainty.

Although the guidance is relevant to all taxpayers, it has particular significance for mid-to-large businesses. These organisations often have more complex tax affairs, the tax at stake is likely to be higher and they are subject to additional oversight through processes such as the SAO regime and BRR+. For these businesses, GfC13 serves as a prompt to review whether existing controls, submissions and tax strategies are aligned with HMRC’s expectations.

Implications for businesses

For mid-to-large businesses, the guidance serves as a reminder that tax compliance is not just a technical exercise, it’s a governance issue with strategic implications. Key areas to consider include:

Senior Accounting Officer compliance

For UK businesses with annual turnover of more than £200 million and/or a balance sheet total of more than £2 billion (and potentially smaller UK subsidiaries of large international groups), the named SAO must personally certify that appropriate tax accounting arrangements are in place. The new guidance reinforces the need for robust systems and controls that can be evidenced and defended if challenged. You can read more on the SAO regime.

Business Risk Review impact

Companies dealt with by HMRC’s large business directorate and certain large and complex companies dealt with by local compliance teams are subject to BRR+. The aim of the review is to assess the tax compliance risk profile of a company and to give it a risk rating, with those with a higher risk rating subject to more frequent reviews and more scrutiny from HMRC. Demonstrating that your business has considered and implemented the guidance in GfC13, such as taking prudent and reasonable steps to ensure documents are correct and complete, may support a lower risk rating under BRR+.

Publication of tax strategies

Large groups, companies, partnerships and permanent establishments are required to publish details of their tax strategy in relation to UK taxation.

This must include:

• The approach of the group to risk management and governance arrangements in relation to UK taxation,
• The attitude of the group towards tax planning (so far as affecting UK taxation),
• The level of risk in relation to UK taxation that the group is prepared to accept, and
• The approach of the group towards its dealings with HMRC.

With the publication of GfC13, now is a good time to review your business’s published tax strategy to ensure it remains aligned with HMRC’s expectations and reflects any recent changes in governance or approach to risk.

How we can help

At Saffery, we can help you:

• Meet your SAO obligations by providing practical, tailored services, including conducting readiness assessments, providing training and workshops for your finance and tax teams, and preparing control documentation and process mapping,
• Prepare for BRR+ assessments, identifying and mitigating areas of potential risk, and
• Review and update your published tax strategy.

You may also be interested in reading our article Corporate Criminal Offence (CCO): a guide for UK businesses and listening to our podcast Is your business at risk? CCO compliance and how to avoid penalties.

For more information on this topic please get in touch with Sean McGinness.