Friday, February 13, 2009

Tax authorities are doing more focused audits

Extracts from the latest E & Y tax risk report

Companies are looking to work more effectively with tax authorities, especially with increased global enforcement and information exchange across geographies. The OECD's proposals for enhanced relationships with large companies underscores the trend. Companies, boards of directors, independent auditors and other stakeholders are holding tax professionals accountable to identify and address risk issues in an effort to identify and address potential controversy.

Another area where tax executives have noticed a change since 2006 is in the increased sophistication of many global tax authorities. In the UK, the UK tax authority is focusing much more resource on high-risk companies particularly those that have undertaken significant amount of tax planning combined with having processes and systems that are not robust. Companies will need to be prepared for undertaking ward at readiness and documentation reviews and more generally undertaking risk, process and control reviews to lower their risk rating to avoid being rated high risk by revenue authorities.

This more targeted approach of investigation is taking place in other jurisdictions around the world as well.

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