TCRM3320 - The Business Risk Review (BRR+): Business Risk Review Assessment (BRR+) templates and narrative
The BRR+ template is intended to be a standalone document summarising the risk rating for the business overall, as well as the risk rating in relation to individual taxes. In completing the template the CCM and Tax Specialists who contribute should be aware that the document may be shared with a range of stakeholders. These may include senior executives of the Board, the Audit Committee and external auditors of the business. If the BRR+ document produced by HMRC does not meet the standards expected, there is a risk of reputational damage.
The template includes sections for both CCMs and Tax Specialists to complete. The CCM section includes giving a view of the landscape in which the business operates (TCRM3330) and the overall risk rating (TCRM3345). There are sections for Corporation Tax, Employment Duties, VAT, Customs and International Trade and Excise Specialists to complete, giving an individual risk rating for each along with a supporting narrative. Where other taxes are relevant to individual business, for example environmental taxes, these should also be given an individual rating by a Specialist.
The narrative provided to the customer by the CCM and Tax Specialist in the BRR+ template must:
- be written for the customer – using active language such as ‘we/HMRC have checked…’ and ‘you’ when referring to the customer and advising who is responsible for what;
- be clear and easy to understand - not be relying on the reader having in-depth knowledge of specific acronyms, pieces of guidance, legislation or internal HMRC processes including BRR+. For example, if HMRC are referring to a specific Low Risk indicator, then the relevant indicator should be written out in full rather than simply referring to the applicable reference i.e. ‘indicator 2.1’;
- include explanations for the rating given if anything other than Low Risk – this will include explicit reference to any BRR+ Low Risk indicators that have not been met and the reason(s) for this;
- refer to any relevant work which has been undertaken by HMRC if this has impacted on any risk indicator(s) – this work may have provided positive evidence and assurance that a Low Risk indicator has been met or could have highlighted to HMRC that a Low Risk indicator has not been met;
- explain to any customer, who is given a Moderate, Moderate-High or High Risk rating, what they need to do to achieve a Low Risk rating. This may be referred to as the ‘path to Low Risk’ and will clarify what actions need to be undertaken to address this, by whom and over what period. The level of engagement and openness expected between the customer and HMRC should also be articulated.
It is also important to note the following points about the BRR+ template and supporting narratives:
- Each tax regime’s BRR+ narrative will likely read like it has been written by a different person – because it has, and this is a natural outcome of the more transparent BRR+ process. While there will be differences between the regime’s narrative, it’s important that the professional standards expected of all HMRC staff in terms of language, spelling and grammar are maintained throughout. The CCM has ultimate responsibility for the final document that is shared with customers and will make changes if felt necessary.
- BRR+ is not a ‘tick-box’ exercise and therefore it’s highly unlikely that the BRR+ narrative will comment on all 24 Low Risk indicators unless, by exception, it is deemed important by the HMRC case team to do so, for a particular customer.
- The BRR+ narrative will reflect the work carried out by HMRC. If, for example, HMRC has undertaken a data-led risk assessment which has not highlighted any significant risks in a particular regime, the BRR+ narrative provided for this regime may be minimal in content.
The CCM and all Specialists involved in the creation of the BRR+ template should use all information available, including the input of colleagues in audit where relevant, as well as their professional judgement in arriving at their view of the correct risk rating. This should be discussed with the customer,as BRR+ aims to increase collaboration, and ideally an agreement will be reached.
Business Risk Review + Template
The Business Risk Review (BRR+) for banking customers should also consider how the bank complies with the Code of Practice on Taxation for Banks. A BRR+ template specifically for use with banking customers is available.
Business Risk Review + Template for Banking Customers
The Business Risk Review (BRR+) for agents should also consider how the agent promotes tax compliance and advises on tax planning. The ‘Agent Landscape’ is considered separately which requires the CCM to comment on:
- Internal control and governance of tax advisory business
- The size, coverage/influence of tax advisory business
- Customer base, and tax services offered including prevalence of contingent fee work
- Any other relevant information- third party information etc
A BRR+ template specifically for use with agents is available while more information about BRR+ for Tax Agents can be found in TCRM3346