Over the past few years the UK introduced a number of alternative approaches to the regulation of behaviour by corporate taxpayers. One of the more innovative approaches, also promoted by the OECD, is a risk-rating approach to tax-risk management, designed to promote an enhanced relationship between HMRC and the taxpayer, based on trust and transparency. The objectives include the improvement of resource allocation and the encouragement of companies to achieve the benefits of low risk rating by, amongst other things, refraining from certain types of behaviour. This research includes a survey of UK tax directors in which detailed tax planning scenarios are used to investigate their views on the impact and success or otherwise of these new approaches. There is broad support for the steps taken to enhance co-operation, although there are questions about the extent to which ratings will affect tax planning behaviour as well as the extent to which administrative measures of this kind should be used to attempt to influence behaviour. The work suggests that, useful though it is, the riskrating approach cannot itself define what is due under the law or eliminate the need to address that central question.
Judith Freedman, John Vella
