Developing your tax risk control framework
Your tax control framework provides the building blocks of how tax operates in your business and brings together several components such as effective tax risk communication mechanisms, clearly defined processes and controls to identify and manage risk, a defined tax risk appetite, tax risk escalation mechanisms and tax risk reporting tools. Your tax control framework relies on all those involved in tax activities being aware of their accountabilities and responsibilities in identifying and reporting tax risk. It is all about good governance.
Your path to an effective tax risk control framework has three elements. The first is to conduct a Tax Risk Review. This will help identify the strengths and weaknesses of your current tax risk management set up.
The next step will be to remediate any high risk areas. These are usually;
- transfer pricing
- contractor status
- mobile employees
- commercial substance of corporate structure
- tax optimisation (R&D and tax depreciation)
Finally, you will need to update your processes, tools and technologies to make your tax risk control framework more resilient and effective.
The Tax Control Framework Roadmap
The Tax Control Framework (‘TCF’) roadmap provides the framework for the effective management of tax within an organisation. It is a pragmatic path that you can use to guide you through the process of building your effective tax risk management.