What goes into a tax risk register?
Four columns, and the last two are what make it a register rather than a worry list. The exposure, described as the authority would frame it. Its quantum, which is an estimate the group is prepared to defend and revise, not a placeholder. The mitigation — what has been done, or what would be done if the position were challenged. And the evidence, identified by document, because a position supported by recollection is a position without support. Ranking then follows: exposures are ordered by the combination of amount and the likelihood that anyone will ever ask.
Why would a board want a tax risk register?
So that a position is approved rather than discovered. Directors carry the consequence of positions they were never shown, and the usual way they learn of one is a query letter. A register puts the group's open positions in front of them while those positions can still be changed: the aggressive ones can be unwound, the defensible ones can be documented while the people involved still remember, and the ones nobody can evidence become a decision rather than a habit. It also fixes the record of what was known and when, which matters if the position is later tested.
How do you quantify a tax exposure you are unsure about?
By stating the mechanism and a range rather than a single number, and by writing down which assumption the number turns on. Most cross-border exposures move on one or two facts: where a decision was taken, whether a payment was for a service or for a right, whether a person was present. Quantify each on its stated assumption and the register tells a reader what to go and check. A figure with no assumption behind it is the one quietly carried forward for years, and then found to be wrong in the direction nobody modelled.
How is a tax risk register different from a provision?
A provision is an accounting answer to a measurement question: what the accounts should carry. A register is a management document about positions, and it includes exposures that carry no provision at all — an unfiled information return, a treaty position taken without documentation, a structure whose commercial rationale was never written down. Those attract penalties or lose relief without changing a tax charge, so they never surface in the numbers. The two documents should reconcile where they overlap, and the register should explain every place they do not.
Should an unfiled information return appear on a risk register?
Yes, and it is usually the line that is missing. Information returns report rather than pay, so they show no balance and attract no provision, yet the exposure on a late or unfiled one can be substantial and can keep a year open. A register that lists only positions with tax attached will therefore rank a small contested deduction above an unfiled return, which is the wrong way round. List them by entity, say whether each was filed, and treat we believe it was filed as unevidenced until the acknowledgement is in the file.
Who should maintain the register in a small group?
Whoever will be asked to explain the positions, which in a small group is often the finance lead, with an adviser drafting the entries. The register does not need software. What it needs is one owner, a review rhythm tied to the group's own filing calendar, and a rule that an entry is not closed until the evidence is identified — not located somewhere, but named. Small groups fail on the last point. The exposure is closed in conversation, the supporting document is never filed, and the position then has to be argued from memory.
Which countries have a tax treaty with the United States?
Around sixty, including Canada, the United Kingdom, India, Australia and most of western Europe — but the list matters less than the terms, because each treaty caps rates and allocates income differently. Two countries with treaties can produce opposite answers on the same pension or the same royalty. What decides your position is the specific article covering your income type. See our country guides.
What is a permanent establishment, and how easily do we create one?
A taxable presence in another country under the treaty — typically a fixed place of business such as an office, branch, factory or workshop, or a dependent agent habitually concluding contracts on your behalf. Some treaties add a services test measured in days. Purely preparatory or auxiliary activity is excluded, but that carve-out is narrower than it sounds: one senior employee working from home in the other country, with authority, has been enough. See business profits and permanent establishment.
