Global Regulation, Local Solutions Emerging Themes 2020 - Page 62



FINANCIAL CRIME AND INVESTIGATIONS
EMERGING THEMES 2020
THE CHANGING
LANDSCAPE OF
TAX RISK
X
REAL-TIME ENGAGEMENT
WITH HMRC
The UK tax landscape is characterised by heightened
tax regulatory obligations, with more than 100 measures
introduced by government over the last decade to
regulate tax non-compliance. In the year ahead, there
are a number of key considerations that firms will need
to keep in mind when dealing with HMRC.
62/
Where disputes with HMRC arise, financial
services firms should be particularly
mindful that:
Key findings from a survey that we recently
undertook of senior tax professionals in
financial services and other industries provide
a fascinating insight into the tax risk issues
that UK firms face:
X
(1) HMRC appears to have an increasing
appetite to pursue enquiries into
financial services firms in respect of
transfer pricing and diverted profits tax.
Given the complexity of such disputes,
such enquiries are likely to be protracted
unless firms maintain pressure on HMRC
to accelerate resolution
Firms are concerned about the increasingly
interventionist approach of HMRC, with 67%
of respondents saying the increase in tax
regulation has a significant impact on their
businesses. For financial services firms, the
corporate criminal offence for the failure to
prevent the facilitation of tax evasion has
resulted in an increased compliance burden
(2) The government has set HMRC a target of
collecting an additional £2 billion by 2023/24
from tax non-compliance. This means
achieving settlements with HMRC is likely
to remain difficult.
Half of respondents said the number of
HMRC enquiries has increased over the
past few years, relating to a wide range of
taxes, particularly corporation tax, VAT and
transfer pricing
X
While the relationships between firms and
their HMRC relationship manager (known
as a “CCM”) is generally positive, a common
theme is that CCMs have their limitations
as they do not have sufficient authority to
make decisions. This can frustrate resolution
of disputes
X
Delay on the part of HMRC is a significant
issue facing firms involved in tax disputes.
This has also been identified as a major
problem by the House of Lords Economic
Affairs Committee, with the balance of
power tipping too far in favour of HMRC.
In the current climate, prevention is therefore
better than cure and firms are advised to seek
to minimise the risk of tax disputes arising, in
particular through strong controls and real-time
engagement with HMRC.
The government has set
HMRC a target of collecting
an additional £2 billion
by 2023/24 from tax noncompliance
100+ 67%
New
measures
against
tax noncompliance
since 2010/11
Of firms say
the increase in
tax regulation
has a
significant
impact on their
businesses
KATE ISON
Partner,
London
JESSICA HOCKING
Associate,
London
/63

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