Enhanced relationship with tax authorities

"From an accounting perspective, the assumption is that a tax auditor has full insight into the position of a taxpayer and will always act in the best interest of the tax authorities to maximize the benefit. In theory this may be the case, but in daily life the tax authorities are not able to audit all files or identify every position in files they have reviewed."

"Tax risk management has become an important tool for tax authorities and taxpayers alike. Given their different objectives, their approaches will not always be identical, but there is a considerable overlap of objectives in terms of achieving greater certainty, fewer disputes and lower compliance and administrative costs.

Transparency about decision making, speedy disclosure and real time working from both sides will be of great assistance and create a win-win situation.

Tax risk rating is, however, a tool which has to be handled with care by the authorities. It involves embedded policy decisions that can be masked as purely administrative processes, but for which revenue authorities need to be accountable. There are potential dangers in tax authorities expecting too much from tax risk management and relying upon this to deal with uncertainties in the law through codes and guidance and enhanced cooperation.

Tax risk management and enhanced cooperation are developments which are being found valuable throughout the world but they are not a substitute for well designed tax law and systems."

"In the United Kingdom, Schedule 46 of the Finance Bill 2009 introduced requirements that the senior accounting officer (SAO) of large companies shall report to HMRC on the adequacy of their tax accounting systems for the production of accurate tax returns. As such the SAO has to issue a fiscal in-control statement:
I [.....] as Senior Accounting Officer of the qualifying company/companies listed below, hereby certify that to the best of my knowledge and belief throughout the company’s or companies’ financial year ended [.....] the company/companies had appropriate accounting arrangements or to the extent it/they did not an explanation is provided below."