Tax reporting and strategy Meeting today s and tomorrow s tax challenges

Transcription

1 Meeting today s and tomorrow s tax challenges James Minneman & Matt Clark Indirect taxes Supply chain insights 1

2 Supply chain analysis Tax functions find it a constant and time consuming challenge to identify and stay up to date on what their organisation is doing at the granular level. Where the group operates, what supplies it makes and receives and when things change, are critical to the management of all the transaction taxes. 1 2 Slide 2

3 The offering Supply Chain Insights Duty Insights Brexit Analyser A tool that can provide visibility of a company s supply chain and consolidated views to quickly identify indirect tax ramifications as well as model future impact of potential supply chain changes. A tool that can provide instant visibility of a company s import and export profile, summarising data including the origin, preference, commodity codes and customs procedure codes that have been declared by a company on the customs declarations. A tool that can provide visibility into your Brexit implications of your supply to determine potential ramifications. Identify the potential increase in customs duty, admin costs, and parts or finished goods under the different Brexit models.

4 The Supply Chain Insights tool Slide 4

5 The Duty Insights tool Duty Insights ( DI ) can help a business to: 1) Identify potential areas of duty savings to support the submission of a duty reclaim 2) Identify potential risk areas with import duty compliance. 3) Make informed procurement decisions for imported goods. 4) Carry out periodic reviews to reconcile data, apportion costs, etc. 5) Make informed decisions on whether controls are robust enough when compared to the value of duty paid. This is an important exercise for all companies which import goods to undertake, especially if they are covered by the Senior Accounting Officer regime 6) Hold informed discussions with customs brokers and freight agents to enhance controls and to discuss the quality of service being provided. What is DI? DI is a tool we developed to allow us to analyse import and export data. We use this data to provide an overview of a business customs footprint and with their approval we can obtain the data directly from HM Revenue & Customs (HMRC) and then analyse it without needing to undertake a site visit and disrupt daily activities. Understanding the business customs footprint will help manage costs and identify potential savings opportunities. For example, we used DI to identify an overpayment of customs duty on goods imported for the retail industry from the following countries of origin: Indonesia, South Korea and Vietnam. Understanding the business customs footprint will help manage costs and identify potential savings opportunities. For example, we used DI to identify an overpayment of customs duty on goods imported for the retail industry from the following countries of origin: Indonesia, South Korea and Vietnam. By analysing the top ten commodity codes by duty paid we were also able to identify misclassification of goods which led to a duty reclaim. Manage risk In a constantly changing UK customs environment DI helps to monitor compliance. Using DI has helped us to fully prepare businesses for HMRC customs audits and allowed them to feel confident during follow-up discussions. It helped to prevent assessments and civil penalties. An DI review can identify authorisation breaches, for example when importing using commodity codes not authorised under a specific customs duty relief scheme. It can help to identify additional control requirements to enable compliance with the Senior Accounting Officer regime, and reduce penalties due under the civil penalty regime for excise duty and the proposed customs civil penalty regime. When customs compliance is outsourced to a customs broker the business may have little control over what data is submitted on customs declarations to HMRC. The DI tool has allowed us to determine the needs for service level agreements between a business and their third party customs broker to ensure that the broker is managed properly. Slide 5

6 The Brexit Impact Assessment tool The Brexit Impact Assessment Tool has been created in order to provide your Business with an understanding of the indirect tax implications of Brexit on their current supply chains. We use your own Business' data for import, export and intrastat movements to fully map your EU supply chain model, including: what you buy and sell, where you buy it from and sell it to and how your supply chain logistics work. The tool then overlays a customs duty and import VAT analysis over this supply chain model, thereby, identifying the potential increases in customs duty, import VAT and admin costs (costs of submitting customs declarations) for your movements of raw materials, parts or finished goods. How could Brexit impact your business? The Brexit process is not likely to be completed for at least 2 years after the UK officially provides notice to the EU of its decision to leave. During this period the UK will begin negotiations with the EU and the ROW to define our trading relationships. Currently, the UK is part of the EU which provides free movement of goods and services plus access to Free Trade Agreements (FTAs) with the ROW territories. Trade with the ROW could potentially be subject to increased costs as we lose access to the EU FTAs. Upon leaving the EU, there will be a customs border between the UK and the EU, treating movements of goods as imports and exports. Customs duty and import VAT will be payable and associated customs declarations will need to be submitted to effect the movement across this new customs border; which could significantly increase the cost of trade with the EU. There are many other facets of international trade that could also be impacted which may present both challenges and opportunities. Why should you plan for Brexit now? It is already challenging for a business to understand its end to end supply chain. Brexit will serve to add another layer of complexity to your international trade. In order to understand the indirect tax implications of Brexit on your business, it will be useful to fully understand and map your supply chain model, including: what you buy and sell, where you buy it from and sell it to, and how your supply chain logistics work. An impact analysis could include overlaying a customs duty and import VAT analysis on top of your supply chain model to compare the impacts of the different trade relationships that might result from the Brexit negotiations. It could take a considerable amount of time to undertake this impact assessment and to identify any actions necessary to implement alternative trading models. For example, a business may have to adapt its financial accounting systems, including ERP or tax engine changes. Slide 6