Is ‘Google’ the adviser of the future?
Non-traditional competitors are entering the service provider market and capturing market share. Who are they? Can content service providers ignore these trends?
A Tax Control Framework (TCF) is an internal control instrument specifically aimed at the tax function within a company. A TCF is not limited to the Tax Department, but an integral component of a company’s Business- or Internal Control Framework (ICF).
The ultimate objective of a TCF is to be in compliance with tax laws and reporting requirements and manage the risks that matter (risks that exceed the companies’ risk appetite). Such framework ensures that an organization has adequate control over its tax processes. A TCF can prevent tax errors, identify opportunities in a timely manner and perform correct filings at the right moment.
A company’s VAT control framework system is adequate if it provides insight into where material VAT risks may arise in the company (awareness), while the degree of risk tolerance is established internally and where appropriate control measures are taken with respect to these risks.
In order to allocate resources to risk and cost saving areas that matter, we determine together the level of risk appetite of the company is accepting. This facilitates prioritization in the deployment of resources. Having defined acceptable levels of risk leads to resources not having to spend time on further reducing risks that are already at an acceptable level.
Subsequently for the area of risks that exceed the company's risk appetite we set up (automated or manual) controls. It is about clear responsibilities, effective systems, documented processes and risk based controls.
For questions please contact us.
Although the potential application is just to the UK, you will clearly want to consider being consistent across jurisdictions.
The tax department objectives and strategies are aligned with the company’s business objectives. Updates take place periodically.
Without a proper tax policy it depends on your personal influence within your organization to kick-start a change. Often that results in a fragmented approach, as not all stakeholders will be convinced. The outcome is that this will negatively impact defining standardized and global controls.
To ensure that group companies act consitently globally and to ensure that group companies benefit from best practices applied by other group companies, but also to ascertain acquaintence with policies and subsequent appropriate application of tax policies across the group.
Policies, procedures, working instructions and manuals are accessible and distributed to relevant employees.
Identify the lowest performing indirect tax processes that have the most direct impact on the company’s business and tax objectives. These are then targeted for improvement. Generate and select a set of solutions to improve the performance.
The tax department risk management strategy differentiates between strategic, operational, financial and compliance risks and contains detailed action plans for managing these risks. Managing risk is about making decisions at all levels of an organization, to limit the effect and likelihood of threats happening and to increase the effect and likelihood of opportunities.
Assess that tax advice given is also correctly implemented:
And impact of changes in business, laws and regulations on implemented tax planning.
In order to quickly gain insight into the level of tax risks (i.e. calculation of the potential assessment), statistical sampling can be used. By selecting a few elements (euros), the reliability of the composition of tax items can be determined to a high degree of certainty.
If not correct, the tax authorities might seek to recover tax due from this supplier via a levy of a tax assessment. If the applicable VAT rate is 25%, the tax assessment will be 25/125 of the consideration charged. This assessment will be increased with interest and penalties to determine the total tax burden.
In order to solve a problem, we also have to identify it completely, and not just settle for the most apparent symptom of that problem.
In order to fix a problem, we have to first understand the root cause thoroughly. We have to accept the possibility that the problem involves far more than what is immediately apparent and will require more work than is estimated at the beginning.
Define the causes of defects, measure those defects, and analyze them so that they can be reduced.
An ERP review should highlight where the VAT configuration could be improved or if additional control measures should be added to the business’s Tax Control Framework.
In order to get senior management's buy-in for change and accept indirect tax priorities it is important that proper visibility exist of the amount of VAT/GST under management in the key jurisdictions.
To avoid any reputation damage and negative publicity around taxes, through building a tax control framework.
The internal tax function should always have insight into the areas for attention through this logbook. The risk register should contain the following labels: number, name of the risk, risk definition, cause for the risk to occur, risk category and the risk owner.
Do not spend time on further reducing risks that are already at an acceptable level.
Tax department professionals are appointed to support multidisciplinary teams during non routine transactions and or substantial business transactions.
Lack of support by management means that any improvements in quality are often temporary. The aim is that management will be encouraged not only to support change, but to become actively involved in making it happen.
Identify the key processes of their organization, measure their effectiveness and efficiency, and initiate improvement of the worst performing processes.
In order to allocate resources to risk and cost saving areas that matter, we determine together the level of risk appetite that the company considers (non)acceptable.
Having defined acceptable levels of risk leads to resources not having to spend time on further reducing risks that are already at an acceptable level.
If the startpoint is a zero measurement we could show that this beginning could have an end game: how a tax strategic plan for the short and long term should look like and what needs to be done to get there.
A split should exist of roles, functions and responsibilities between tax department and the business are well documented in manuals, procedures and working instructions.