The only way is ethicsby
With crusader Dan Neidle battling for good in the field of taxation, Philip Fisher fondly imagines a more ethical world where the profession doesn’t need superheroes.
In the same way that Robin Hood and Batman attracted detractors despite their efforts to do good, crusaders in the field of taxation also face opprobrium, often from members of our profession.
The latest tax superhero is a former Clifford Chance head of tax who hasn’t got the hang of retirement, spending a great deal of his time drawing attention to glaring holes through which tax revenues previously disappeared without trace. As such, Dan Neidle is making a big name for his nascent think tank Tax Policy Associates and finding himself on the front pages with increasing regularity – and even a headline speaker at AccountingWEB’s Festival of Accounting & Bookkeeping.
Already, the organisation “dedicated to improving tax policy and public understanding of tax” has helped to thrust Baroness Mone and Douglas Barrowman into the spotlight, questioned whether Post Office can sue Fujitsu, and dug deeply into foreign entities holding and hiding real estate.
Closing loopholes and chasing truth
Of greatest interest to our profession, is his desire to close tax loopholes and attack tax avoidance schemes that border on fraud – and that’s putting it politely.
This weekend, Neidle hit the front pages yet again having discovered through a Freedom of Information request by the Bureau of Investigative Journalism and TaxWatch that the much-vaunted Criminal Finances Act (CFA) designed to stop large organisations – including high-profile accountants and lawyers – from facilitating tax evasion is failing.
Admittedly, the legislation is only a little over six years old but it was disappointing to discover that there has not been a single prosecution connected to it.
In an article that Neidle penned for The Observer, the thinking man/woman’s Batman described the act as “a brilliant concept”, which would have a dramatic impact since “every corporation worldwide would be turned into a giant unpaid tax policeman. It had the potential to radically reduce the scope for bad actors to exploit legitimate businesses.”
He likened it to the Bribery Act, which has been far more effective. Instead, while HMRC has used the CFA to set up over a dozen live investigations none has so far led to a prosecution. His assumption is that HMRC has been doing sweetheart deals behind the scenes instead, which typically bring in less money than they should and save those involved in criminal activities from embarrassment or worse.
As a result, like so much else attached to the UK’s tax authority, those who might be persuaded that pushing the boundaries of tax avoidance to the limits (and beyond) will happily continue to take punts, since the idea that they could end up with an unlimited fine or prison sentence no longer seems imaginable.
This has echoes of the self assessment system, under which many now chance their arms on the basis that HMRC is under-resourced to the point where it is highly unlikely to identify underpayments that help bolster the mighty tax gap at the expense of us all, let alone pursue those involved.
Just imagine what the government could do with an extra £30bn, to take a conservative view of the HMRC estimates or £100bn plus, if you prefer the views of another oft-maligned crusader, Richard Murphy.
It is sad that Neidle comes to the conclusion: “A law that’s not publicly enforced may as well not exist. Only saints will comply with it.”
Accountability at every level?
Many of us come from a background that included following ethical guidelines to the letter. Whatever happened to the principles that Rishi Sunak was so keen to promote less than 18 months ago: “Integrity, professionalism and accountability at every level”?
Quite frankly, if you tell your clients that you will not permit them to do something a wee bit dodgy because it is unethical, at best they might laugh at you, at worst switch service provider to someone who has lower professional standards.
To date, there haven’t been many accountants willing to admit that a significant proportion of their fee income derives from activities that the man or woman in the street might assume to be unethical, to wit carrying out audits that you know to be substandard, facilitating corporate-level cheating in ethics exams (you couldn’t invent it) or promoting tax avoidance schemes that are more likely than not to fail.
If everyone behaved ethically, then there would be no need for a CFA or a Dan Neidle. In today’s world, where profit too often overrides ethics and sometimes even legality, let’s cheer on the good guys for a change.
Dan Neidle will be one of the headline speakers on day one of the Festival of Accouting & Bookkeeping. Book your FREE ticket to see Dan's keynote at the event and enjoy access to the two day event at the NEC, Birmnigham.