1. 1 The Scope for Continuous Assurance In Tax Compliance Ray Butler, CISA ray.butler@hmce.gsi.gov.uk

2. The Scope for Continuous Assurance In Tax Compliance 2 Agenda Potential – Benefits / Pitfalls of continuous assurance for tax Exploring – Theory / Issues NOT : – Policy Statement – Description of anything in “Real World”

3. The Scope for Continuous Assurance In Tax Compliance 3 The Goals of a Tax Authority Optimising Compliance Provide Services to assist compliance Ensuring fairness, equity and equality in the levying and collection of taxes.

4. The Scope for Continuous Assurance In Tax Compliance 4 Tax Assurance Scope Macro Level – Returns on time / Liabilities Paid Micro Level - Transactions – All Accurately Included ? – Reported at Correct Time ? – Belong to this business ? – Correct Deductibility / Liability ?

5. The Scope for Continuous Assurance In Tax Compliance 5 Continuous assurance in Tax Checking Transactions for VAT Capturing Liability “on the Fly” Checking Customs Declarations From Manifests / Commercial Documentation Monitoring Duty-free Transactions Monitoring Payroll Transactions

6. The Scope for Continuous Assurance In Tax Compliance 6 Limitations Limited To Recorded Transactions Can’t Detect Unrecorded Income / Expenditure May Not Detect Posting to Wrong Accounts May Not Detect False Purchase Transactions May Not Give ANSWERS, Will Give QUESTIONS

7. The Scope for Continuous Assurance In Tax Compliance 7 Benefits of Continuous Tax Assurance - Taxpayers Reduction in the Cost of Compliance With Tax Requirements. Facilitating Compliance Self-assessment Assurance on Mainstream Business Activities Peace of Mind Cash Flow Control

8. The Scope for Continuous Assurance In Tax Compliance 8 Benefits of Continuous Tax Assurance - Tax Authorities Reduction in Cost of Assurance Services Improvement in Level of Assurance Reduction in Errors – Improvement in Tax Yield Improved / Quicker Trend Analysis Cross-matching Transactions Improved Monitoring of Case-specific Conditions Running Liability Calculation

9. The Scope for Continuous Assurance In Tax Compliance 9 Risks involved - Taxpayers Privacy Over-Audit Trading Partner Resistance

10. The Scope for Continuous Assurance In Tax Compliance 10 Risks involved – Tax Authorities Over-reliance on recorded transactions Privacy / security vulnerability Legal Powers Privacy legislation Non-Repudiation / Authentication

11. The Scope for Continuous Assurance In Tax Compliance 11 How can Continuous Assurance for Taxes be Delivered ? Built Into Applications By Commercial Continuous Auditing Providers By Application Service Providers as part of their services By Revenue Authorities as part of their service to Business – Continuous or semi continuous assurance – On-demand data downloads

12. The Scope for Continuous Assurance In Tax Compliance 12 Potential Vehicles for Data Transmission Common Elements – Header – Identification & Control data – Detail records Encryption / Signature Flat File Special XML schema XBRL GL etc

13. The Scope for Continuous Assurance In Tax Compliance 13 Conclusions & Way Forward Issues to be addressed – Acknowledge Limitations – Resolve Legal Powers issues – Resolve Privacy issues – If Revenue Authorities provide CA Will this poison the well for commercial providers ? More than just a national issue… In five years……

14. The Scope for Continuous Assurance In Tax Compliance 14 Any Questions........