Accountancy industry called to action

Her Majesty’s Revenue and Customs (HMRC) have become inundated with tax disputes. A record number of investigations, mostly involving allegations of tax avoidance, have led to a huge backlog of cases waiting to be heard (over 27,000).

Criticism for the HMRC

HMRC are receiving a great deal of criticism for poor handling of the situation and not working through the cases quickly enough, and some question how sustainable current aggressive tactics for dealing with tax avoidance are, given that many tax payers (including organisations) are potentially left in financial limbo for years.

According to Rob Whiteman, CIPFA chief executive, the accountancy profession must take steps to assist in tackling the public unease surrounding tax avoidance, both in the UK and globally. Whiteman feels it is time these firms stepped back from the comfort of ‘the letter of the law’ and looked at their own role in the activity.

Addressing the World Congress of Accountants, he urged the profession to take the lead when it comes to ethical tax payments. His speech, entitled ‘Promoting Fairness and Growth Through Cooperation on Taxation’, touched on the need to create a more transparent and certain tax environment. He stressed the accountancy profession’s responsibility to head the dialogue on tax avoidance sustainability with some tough questions, placing the issue, and the facilitation of tax avoidance through aggressive management and planning, firmly in the centre of the debate.

Global Measures Implemented

These comments from Whiteman coincide with the work being carried out by the European Union and the Organisation for Economic Cooperation and Development. They are developing revised rules as part of a bid to prevent profit sharing and ‘base erosions’ by corporate profiles within the global tax system. It seems large global bodies, such as the Organisation for Economic Cooperation, are losing patience with those individuals and corporations that appear do everything in their power to pay less tax than they should, as well as the firms that facilitate such practices.

Moving forward, Whiteman suggests a new, tougher and more ethical stance from the accountancy industry. As well as moving away from the role of protector for organisations looking to pay less tax than expected, firms should also work together to develop best practices which ensure that less than ethical firms are not promoted within the industry.