With year-end tax returns on the horizon, it is a good time to look beyond filing and consider how your business manages its tax obligations throughout the year. Inland Revenue has recently reiterated the importance of tax governance, particularly for businesses that do not yet have a framework in place. For those businesses, now is an opportunity to put practical policies and processes in place to support ongoing compliance.
A tax governance framework sets out the policies, processes and controls your business uses to monitor and manage tax risk. It should give you confidence that the financial information behind your tax returns is correct and complete, and that responsibility for managing your tax obligations is clear.
A fit-for-purpose framework reflects your business's size, complexity and risk profile. Whatever its form, it should include documented policies for managing the tax obligations relevant to your business. As well as supporting day-to-day compliance, a tax governance framework can work in your favour if something goes wrong. Inland Revenue has said it will take a business's tax governance framework into account when deciding on penalties following an investigation. Tax governance has been on Inland Revenue's radar for some time and remains part of its broader compliance focus, including its more visible debt recovery activity.
If you already have a framework in place, now is a good time to check that it still reflects how your business operates. If you do not, or if you have any questions, we welcome the opportunity to discuss what a practical framework could look like for your business.
How does your business manage tax risk?
The questions below cover some of the core components Inland Revenue looks for in a tax governance framework. They are not exhaustive: a fit-for-purpose framework will depend on your business’s size, complexity and risk profile. If these questions raise concerns about your framework, the Buddle Findlay tax team is experienced in helping clients design, review and maintain effective tax governance frameworks that integrate seamlessly in your business. Please get in touch if you would like to learn more.