This new Business Risk Review guidance applies to all large companies from 1 October 2019 and moves away from the previous two-category system of Business Risk Review as either low-risk or "non-low" to a new four-category sliding scale of tax risk.
The new BRR+ approach will be implemented across all large firms, but we anticipate it may also become HMRC's new business risk review model for mid-sized companies in the years ahead.
The new BRR+ process introduces the following risk categories:
The new system allows businesses to benefit from active tax risk management. The new approach also takes into account that even complex international businesses can be considered low risk, provided they can demonstrate they have addressed certain risk factors.
Under BRR+, HMRC will gauge the size, scope and depth of a business. Through this process, HMRC is seeking to identify how behavioural risk factors reduce or increase the inherent risks present in the business. In addition, HMRC has laid out comprehensive guidance and assessment indicators detailing how it assesses risk factors in three key areas, each having different requirements to achieve a low-risk rating.
For those assessed as low risk: interactions with HMRC will, in general, be driven by the assessed rather than HMRC, with risk reviews being conducted on a three-year cycle.
For those assessed as high risk: expect targeted interventions from HMRC, with a likelihood of several meetings being necessary each year, as well as full annual Business Risk Reviews.
Our tax risk management specialists have in-depth experience and knowledge of HMRC’s Business Risk Review processes. We can share practical experience and insight based on our work with other businesses in similar sectors.
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