Co-operative Compliance: A Framework

From Enhanced Relationship to Co-operative Compliance

image of Co-operative Compliance: A Framework

This report examines the relationship between large business taxpayers and revenue bodies, five years on from the publication of the FTA’s Study into the Role of Tax Intermediaries. The study recommended that revenue bodies develop a relationship based on trust and co-operation. The report is based on a detailed examination of the practical experiences of countries that have established this type of relationship.

The report finds that the pillars of an improved relationship highlighted in the Study remain valid. However, it identifies some additional features that are equally important: the part played by the tax control framework used by a large business in providing an objective basis for trust is emphasised. It also suggests that “co-operative compliance” is a better description of the recommended approach than the original “enhanced relationship” label.


The report addresses some questions that have been raised about the compatibility of the new approach with certain legal principles and discusses the internal governance of these programmes within revenue bodies. The importance of making a sound business case for the approach and how to measure the results of co-operative compliance programmes is addressed. The report concludes with some thoughts about the future direction of the co-operative compliance concept.

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Evaluating the value of co-operative compliance

A revenue body has a responsibility to ensure it manages its compliance risks in a costefficient and effective way. New strategies or new instruments as part of a sound compliance risk management system must contribute to the strategic goals of the organisation (effectiveness) against the lowest possible costs (efficiency). In addition society will require the revenue body to be able to demonstrate how any new strategy or instrument adds value to the public asset that is the tax system. In the specific case of the co-operative compliance model this entails both making visible how the model operates in practice and how it contributes to a higher level of compliance and a higher level of assurance that the correct tax is being paid and that there is a consequent decrease in the tax gap.


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