Our ongoing engagement with groups in the Top 500 tax performance program reveals that many do not have documented procedures for identifying and managing tax issues and risks relevant to the group.
Having documented processes and checks-and-balances in place to recognise and manage issues is our second principle of effective tax management. Following this principle helps Top 500 groups identify and manage issues before they become risks that can impact businesses and lead to exposure to liabilities, penalties, and interest.
All Top 500 groups should have a documented end-to-end process that includes:
an environmental scan when the governance framework is first implemented, to identify ‘business as usual’ tax issues
keeping an active register of material and tax sensitive issues, and procedures that ensure the right tax treatment of significant transactions, including quantitative and qualitative factors to determine when external advice should be sought
a policy that ensures tax is considered when atypical transactions arise, and processes lead to the correct tax treatment
clear instructions for preparing tax returns, including record keeping, reconciliations and disclosures, as well as procedures where external tax agents are engaged
a process for checking and signing-off tax returns that is recognised within the group and by tax advisers.
Remember that Top 500 privately owned and wealthy groups bear responsibility for the accurate information provided in their tax returns. Those groups need to set up the right processes and checks-and-balances to ensure the integrity of that data before providing it to their tax adviser.
For more information about implementing effective tax governance, visit Effective tax governance criteria for Top 500 private groups. To find out more about current issues and risks within the Top 500 tax performance population, and our insights about the importance of tax governance, read our 2024 Top 500 findings report. All of the observations, findings and recommendations in the report are based on our ongoing engagement with Top 500 groups like yours, so you’ll know they’re timely and relevant.
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