Tax avoidance: the reputational damage to our profession
I suspect that the accountancy and tax profession will look back on June 2012 with mixed feelings, says Rebecca Benneyworth MBE.
The campaign by The Times newspaper obviously started some time ago, as it would take a little time to build up such a body of material on the various aspects of tax avoidance that the newspaper sought to bring to the public’s attention.
Some will be pleased that this thorny issue has been aired, and in spite of a fair bit of hot air last week, what the paper did manage to do was convey the outline of some quite complex avoidance schemes in an intelligible way. So my first stop is to congratulate those journalists who must have spent many long hours researching and trying to understand some of the schemes.
In the early part of the week I was most concerned about the reputational damage to the accountancy and tax profession. I do not want to hear the word “accountant” be spoken with a sneer by the wider public; I dread the profession being labelled with the same sort of tag as “ambulance chasing” claims handlers. We have studied hard and hold high professional standards, and it does no good for the wider public to see us as grasping or cheating (or at least enabling and supporting that behaviour by our clients). We have an extremely important role to play, both as business advisers, and in assisting in the day-to-day delivery of the tax system, whether through Self Assessment, or by supporting a very wide range of businesses with their tax obligations – VAT, payroll etc. which without doubt they would not be able to manage unaided. The tax authority does not have the staff or expertise to take this task on.
We also have a role to play in supporting the government to bring forward good and workable tax legislation. We can only keep up the pressure on that score – and sometimes we are heard, and sometimes we are not. So I am very concerned about the reputational damage to our profession as this could take years to repair – if public perception of us can be restored.
I have so far resisted the “M” word. Last week gave me time to think about the moral issues, and on reflection I have changed my stance. It is not my (or indeed anyone else’s job) to make moral judgements about my clients. Provided they behave within the law, and do not conceal income that is taxable I can do my job. The moral issue is a personal one. It is for everyone to consider whether, in times of national hardship, with families going hungry and losing their homes, it is right to seek to avoid tax in the ways that have been publicised. We have an example in that one individual, when challenged, and on reflection, decided that this was not an appropriate way to behave.
This does not mean that I have changed my approach to tax avoidance. It is not an area I intend to advise on, and I have no intention of ever getting involved in any of it. I would advise clients considering seeking advice about some of these schemes that they rarely work or rarely work for long, can end up costing an awful lot of money to get out of, and “mark your card” with HMRC, who must take account of that behaviour in any risk assessment they make.
So what should be the upshot of last week’s coverage? I believe that HMRC must redouble its efforts to get all of the schemes closed down – either through specific legislation or a GAAR (which is of course due next year). But it goes further than this. The tax authority must also apply resources to following up every case where tax avoidance schemes have been implemented to ensure that any outstanding tax due is collected. Those who have failed to implement the scheme properly should be pursued relentlessly. Schemes that have not worked should be identified and all of those implementing them should be promptly approached to collect the tax that is due.
So the light shines too on an under-resourced tax authority struggling to identify where to best apply their efforts. I suspect that last week has just pushed one area a bit higher up the agenda – and a good thing too.
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Rebecca trained in London with Kidsons and, on qualifying, spent some time as Chief Accountant of a manufacturing company. She now has her own small practice in Gloucestershire that comprises of owner managed businesses and small companies.
She also lectures extensively for a range of professional bodies, accountancy firms,...