19 December 2014
Whilst users of tax avoidance schemes would wish to avoid publicity, tax avoidance itself was in the spotlight last month.
On the international stage The World Congress of Accountants (WCOA) in Rome debated the profession’s role in tax avoidance. One side of the debate was represented by the CEO of CIPFA, the public accounting body, who made the case for accountants promoting the payment of the correct amount of tax in the context of tax being one of the necessities for helping to society to function properly. It’s unlikely that most of us think about the functioning of society when we see the deduction on our payslips or make a payment to HMRC in January. Maybe that’s what the recently issued taxpayer statements are intended to lead us toward?
Deloitte’s UK head of tax had a somewhat different view, highlighting the difficulty in deciding where the dividing lines fell between tax avoidance and tax planning and between normal activity and aggressive action. All of this was considered in the context of commercial reality, which, because of its immediacy, is likely to crowd out any questions of morality.
More locally, Jolyon Maugham, a leading tax barrister, delivered the annual Hardman Lecture at the ICAEW. He argued that the tax bar should be made more accountable, as, he believed, this would remove barristers from giving advice without having any duty of care to the end users of the advice, the taxpayers. If there could be a more direct connection between these two groups, then any barristers not advising in the best interests of their taxpayer clients would be susceptible to censure by the Bar Standards Board. The only problem with this is that the tax bar is a small and close-knit world and it may be that the only barristers capable of understanding any misdemeanours are those who would be unwilling to be involved in action against their colleagues.
Whilst policing of barristers may stop a minority from giving theoretical, impractical and, some would say, irresponsible advice, it has to be asked as to whether this type of activity is really any more prevalent than some of the slapdash law drafting perpetrated by government, which allows at least some of the tax avoidance industry to thrive?
Whatever the outcome of the debates, tax avoidance will be with us for some time and there will continue to be arguments as to whether or not a particular course of action is avoidance and whether or not tax is a moral question. It’s certain that everyone within society should benefit from it and that everyone who wishes to so benefit should contribute to society. The question as to what extent this should occur remains unanswered.
If you would like to discuss the details of this blog post further, please contact John Sheehan from our Letchworth office or a tax adviser at your nearest location. Alternatively, you can complete our online contact form.