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If the introduction of the enhanced Business Risk Review+ (BRR+) by HMRC on 1 October 2019 passed you by, you’re not alone. A snap poll of ICAEW members and non-members on the Future of Tax Automation webinar found 43% were unaware of BRR+ and only 13% were actively seeking to comply.

HMRC concluded its pilot meeting for the new framework, which is designed to assess the risk profiles of the 2,000 largest businesses in the UK, in March. Since then, there’s been very little coverage of the new obligatory criteria. So what’s changed?

BRR+ sees a substantial overhaul of the old system. Gone is the pass/fail binary scoring of ‘low’/’non-low’ risk which has now been replaced by a far more informative graded score of ‘low’, ‘moderate’, ‘moderate-high’, and ‘high’ risk. (Needless to say, the lower the score, the better the risk stature of the company).

The idea behind this new classification is to make the process more “interactive and iterative”, according to HMRC, so that the business and HMRC’s Customer Compliance Managers (CCMs) can then constructively engage in a “continuous dialogue on reducing risk”.

BRR+ criteria

The assessment itself sees the introduction of three behaviour-based categories. These level the playing field, allowing a business which may be at higher risk because of the sector it operates in to still take steps to improve its risk profile.

Each behaviour category is applied to each of the tax regimes, so a business will be able to see how well it is performing in relation to corporation tax, VAT etc without these impacting one another. There is an initial assessment of the Business Landscape – the size, scope and depth of the business and its tax interests, the complexity of international structures and financing, as well as the degree and pace of change within the business. This then forms the context in which the HMRC CCM assesses the three behaviour categories below:

  • Systems and Delivery – The systems and processes the business uses. This section assesses whether the business has sufficient resource to deliver timely and accurate returns, declarations, payments and claims, including accounting systems and processes, that are suitable to the size and complexity of the business.
  • Governance – How the business can prove accountability when it comes to managing tax compliance and tax planning. This includes documented evidence of the engagement of senior personnel ie an SAO or FD in the process as well as compliance with regulations ie CbCR, FATCA etc
  • Approach to Tax Compliance – Whether the organisation retains an open and transparent relationship with HMRC.

HMRC provides examples of the evidence that the business could provide to help improve its risk score. The scoring itself is demanding. For example, to be regarded as ‘low risk’ in the Systems and Delivery category, the business must meet seven out of the eight indicators, the following two of which are compulsory:

  1. Adequate Systems and Processes: Does the customer have the appropriate systems and processes and a sufficiently resourced tax team in place to be able to deliver the right tax at the right time?
  2. Correctly used Systems and Processes: Are the systems and processes used to deliver the right tax at the right time?

The business would be rated ‘moderate risk’ if it met indicator 1 and 2 above and all but two of the other eight indicators and is taking clear action to resolve these failures. It would be rated ‘moderate-high’ risk if it fails to meet either indicator 1 or 2 above and /or fails to meet more than two of the other eight indicators. If it fails to meet indicators 1 and 2 it is automatically deemed ‘high risk’.

Reducing risk

In terms of demonstrating compliance with the Systems and Delivery criteria, HMRC suggests evidence might include an “appropriate financial investment in systems and processes”. So having, and being able to evidence having, tried and tested automated systems are significant factors in bringing down the risk score.

But BRR+ also looks for “no evidence of significant basic and/or repeated errors”. Given that close to 90% of spreadsheets are estimated to contain errors this creates a strong incentive for the business to reappraise its dependency upon spreadsheets. Using a dedicated tax solution, as opposed to spreadsheets, will reduce risk and potentially give a lower BRR+ score.

The ICAEW snap poll revealed that although 44% are intending to continue using the spreadsheets they use today, 52% want to reduce or eliminate this form of digital record keeping. Only 4% were already using a dedicated tax solution that was capable of performing the necessary calculations and submitting returns.


Where does this leave the large businesses captured under BRR+? These may well regard the detail specified in BRR+ as onerous at first but automating their systems and processes will help counter any additional workload. Adopting automation technology that has the dexterity to cope with handling data from multiple entities and conducting complex calculations will help drive consistency across the tax function.

Care should be taken to select a system which is capable of supporting the further stages of HMRC’s Making Tax Digital initiative to ensure that any systems implemented deliver value for many years to come.  This should have a knock-on effect on processes, allowing the human resource the company does have at its disposal to be used more productively, while reducing the opportunity for errors.

For those that do adopt more advanced automated systems, BRR+ offers real benefits. Far from being just a tick box exercise, BRR+ will see those that have mitigated risk being subjected to less scrutiny going forward. HMRC has confirmed that it considers “the existence of robust systems and processes demonstrates… a sustainable ongoing tax compliance process which requires minimal HMRC intervention”. Therefore, businesses deemed ‘low risk’ will be trusted to manage their tax risk independently without intervention from HMRC in the future. These businesses will only have to conduct the BRR+ every three years. As for the rest? For them, BRR+ will be an annual hurdle.

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