This is an excellent book that offers straightforward practice guidance to tax directors on how to manage tax risk.

It would be easy for a work dealing with such a subject to be dry and turgid. However, this book is far from it. While there is an overall structure to the book, each of the 15 chapters is fairly short (all being under 20 pages) and can be read independently, thereby allowing the tax professional to dip into the book when he or she has a spare moment.

The book is comprised of four parts. The first part is background and looks at the role of the tax director, why there is an increased focus on risk management and at accounting for tax.

The second part of the book considers the factors that are often an impediment to tax compliance; including chapters on international issues and company culture. This part also contains some chapters with titles that sound rather theoretical, such as ‘People are key’ and ‘Complex organisations = complex problems = tax risk’. However, as with all the chapters in this part, they contain a large number of case studies. These not only reinforce the authors’ message but also entertain the reader, thereby aiding retention as well as making reading the book a pleasant experience. Thus, far from being abstract, this part offers a practical discussion of the factors contributing to tax risk.

The third part is a single-chapter extended case study looking at the tax planning arrangements entered into by long term capital management, which further highlights the factors that increase tax risk that are discussed in Part 2.

The final part discusses practical strategies to achieve tax compliance. It contains chapters on risk assessment, drafting a tax policy, tax processes and controls, documenting tax processes and controls and learning from problems, errors and deficiencies. The final part also contains a conclusion, suggesting 11 ‘top tips’ for tax directors.

There is also a useful appendix of (23 pages) country specific compliance issues in Australia, Canada, China, France, Germany, India, Ireland, Japan, the Netherlands, Poland, Russia, Switzerland, UK and the United States. Aside from this appendix, the focus of the book is on generic causes of and ways of minimising tax risk, rather than of risks relating to specific taxes.

The experienced tax director will already know much of what is contained in the world. For someone new to the role, however, this book might be invaluable.

Michael Blackwell, McGrigors
Taxation Magazine
September 2008

Global Tax Risk Management, written by PJ Henehan and Aidan Walsh, is a thoughtful and thought-provoking book which should be read by tax directors and finance directors. Professional tax advisers will also benefit from this view of tax risks from the perspective of their corporate clients.

The book's stated purpose is to help tax directors to function in an increasingly control-driven environment and to help them in articulating what they typically already do as part of their normal activities, even if not under the banner of 'tax risk management'.

The book's focus is on tax compliance and tax accounting risks resulting from operational failures. It deliberately does not attempt to deal with risks of a legal nature, such as litigation with tax authorities on technical matters or drafting of tax-relating clauses in contracts.

There is a clear need for a book such as this. Statistics show that, for companies subject to Sarbanes-Oxley, tax has been one of the main reasons why material weaknesses have been reported, in some cases necessitating restatements of published financial reports. In addition, tax authorities in the larger developed countries are increasingly focusing on the control mechanisms established by large companies in relation to tax compliance.

The authors do not attempt to prescribe a standard framework for management of tax risks in companies: they recognise the extent to which companies differ from one another as well as the different perspectives on tax compliance in different countries. They also are mindful of the limitations of formal procedures and controls:

several early chapters of the book are devoted to discussion of the extra tax risks presented by operating in several countries, the challenges in promoting an understanding of tax issues and in implementing tax rules in a large organisation, the need for standard processes, as well as the human factors affecting management of tax risks.

The final core of the book is contained in the final six chapters, which cover the topics of:

• Performing and documenting an assessment of tax risks for the company
• Drafting a tax policy
• Controls relevant to managing tax risks
• Documenting the company's tax processes and controls
• Learning from mistakes and failures
• A list of tips for tax directors which distils into two pages much of the discussion in all of the preceding chapters.

The Appendix contains a useful list of specific tax risks issued in 14 different countries. Especially useful here is a summary of 'tax traps for the unwary', including situations where the consequences of non-compliance are disproportionately (and therefore surprisingly) high.

The authors do not shy away from broad or provocative statements such as

• A tax director should not be a police offer: 'A tax director should be a trusted adviser, a helper. The role of the police officer is already taken by the tax authority.'
• 'The tax authorities want to be your friend, but they also want to be the police officer... The two roles are completely incompatible'
• 'Having a good relationship with your tax authority is important. However, we are assuming tax risks if we think the relationship is more than it is...'

While the reader may not agree with all of these statements, they will prompt a valuable questioning of existing attitudes and procedures.

Willie Holohan is managing director of tax at DEPFA BANK plc.

Finance Dublin, May 2008

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