EM8101 - Companies: Groups: Risk Assessment

The group as a whole should be looked at. The time limits for opening enquiries into returns will in most cases allow you to make a co-ordinated assessment of the risks in the returns of group members before opening any enquiry. This does not mean that you have to await delivery of returns from all of the companies in a group before you decide whether to open an enquiry into a return. Some groups contain companies whose returns are a low risk year on year or where clearly only limited aspects need to be covered by enquiry and there could be no impact on the returns of other group companies. For these returns you may be able to decide not to open an enquiry or to open an enquiry into specific aspects before all returns from the group are received.

You must not allow late delivery of returns or differing accounting dates to impede a proper assessment of risks in the group. You will need to consider whether such factors are a reflection of the general attitude to compliance. Delivery of the outstanding returns should be sought first of all by contacting the company or agent to establish when the return is to be delivered. Where that does not result in delivery within a reasonable time you could make a FA98/SCH18/PARA36 determination before the return becomes 6 months late.

If returns remain outstanding when the enquiry window for returns of other companies in the group is about to close, your risk assessment and decision to make enquiries into the returns that have been delivered will be based on the information available. You should bear in mind that such circumstances may mask aspects that merit enquiry. Where the enquiry window has closed and information subsequently comes to light as a result of the outstanding returns being delivered you may still be able to make a discovery thus allowing the aspect to be taken up EM3250+. On the other hand opening a “protective” enquiry into a return pending delivery of outstanding returns may result in an application to close the enquiry EM1975+. Where an enquiry is opened while other returns remain outstanding you should make it clear that you may be asking questions about other aspects of the return later on once the outstanding returns for other companies in the group are delivered.

Often a risk will be group wide or be present in the return for many companies in the group. Where you are conducting enquiries that affect more than one company in the group often these are included in one strand of correspondence, or discussed as one issue at meetings. But your need to conduct enquiries as efficiently as possible must be subject to the requirement to do so within the terms of the CTSA legislation and our Code of Practice (COP14).

Information may be received with one group company’s return, or during an enquiry into that return, that may be relevant to the liability of another company in the group. You should be alive to the need to expand the scope of your enquiries into one company to encompass aspects which arise from other group companies.