Building trust through tax strategies aligned to your business
In recent years, having a tax strategy that promotes trust has become a major reputational issue for businesses. HMRC have put better tax governance and tackling avoidance at the top of their agenda, seeking transparency from organisations, while enforcing accountability within the business.
The Finance Act 2016 sought to provide the transparency called for by stakeholders, including the public, by requiring all large companies to publish a tax strategy document online. The rules set out a prescriptive disclosure requirement that provides details of the business' approach to dealing with HMRC.
Our approach to tax strategy and governance reviews is to work with you to develop a strategy that is genuinely aligned to your business, can be consistently followed and meets the requirements of the legislation and HMRC's guidance.
What should you include in your tax strategy?
The legislation requires that a group's published tax strategy must include the following:
- the approach of the business to tax risk management and governance arrangements in relation to UK taxation
- the attitude of the business to tax planning
- the level of risk the business is willing to accept
- the approach of the business towards its dealings with HMRC.
Who do the rules apply to?
The rules apply to all businesses who, in the previous financial year, had:
- turnover exceeding £200 million
- a balance sheet exceeding £2 billion.
UK companies or groups that are part of a Multi-National Enterprise group that meets the Organisation for Economic Co-operation and Development’s ‘Country-by-Country Reporting’ framework threshold of global turnover over 750 million euros also need to publish a strategy.
The new rules apply equally to companies, partnerships, UK permanent establishments and other ‘relevant bodies’.
How can we help?
The most challenging part of developing a tax strategy is aligning your planning with the wider activities of the business and ensuring the board is engaged.
Our approach is to:
- understand your businesses needs (and that of key stakeholders, eg the Head of Tax, CFO and audit committee chair) and your existing approach to tax and tax risk management
- review the current tax strategy (where this exists) and governance arrangements to assess the organisation's adherence to these through interviews with key stakeholders, including non-tax individuals in legal, risk and finance teams
- highlight potential risk areas, and discuss our findings and recommendations for improving controls
- draft a briefing paper for discussion with the CFO and the wider board in order to obtain board-level approval
- work with you to formalise the strategy; develop a plan for implementation throughout the organisation; and advise on controls and testing going forward.
The benefits of working with us:
- we are familiar with the internal working arrangements, pressures and political challenges that can exist within organisations – and are sensitive to these in their work
- we have significant experience of working with boards, CFOs and Heads of Tax to provide appropriate challenge and ensure that you get approval for the tax strategy at appropriate senior levels
- the work will be undertaken by senior members of our team to ensure you get the relevant technical expertise.
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