Partner An unnamed firm
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“If you don’t, someone else will…”

18th Apr 2016
Partner An unnamed firm
Columnist
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I can’t be the only accountant who has been threatened by clients who try to justify all kinds of activities using that well worn phrase.

We've all probably heard builders say something like it, or its best friend “I haven’t any choice because everybody else does”, in connection with your little repair job and their tax affairs. But when it comes from a “politically exposed person”, perhaps it is time to change your philosophy.

For me the shock arrived when Dominic Grieve, the attorney general in the last government and currently chair of the Parliamentary intelligence and security committee, used exactly this logic in the media.

One of the strangest consequences of the Mossack Fonseca revelations about nefarious activities emanating from Panama was this response from a man who was our leading law maker until last year. He should be one of the most respectable and upstanding politicians in the country.

I am a big fan of our brethren in the construction industry and their close cousins who sit in estate agents offices. But these are the individuals you would expect to play fast and loose with the law. I wouldn’t be surprised to see them driving while texting on their mobile or cheating customers and quite probably the taxman. They probably even boast about it after a couple of pints.

But I am a lot less comfortable to hear this message trotted out to justify the UK’s support for the promotion of tax evasion in its Crown Dependencies. Grieve stated that if we did not allow rich criminals to hide their ill-gotten gains in places such as the British Virgin Islands to avoid taxes, they would just take their dodgy business elsewhere.

Surely that is same as saying if I did not rob that gullible little old lady, someone else would anyway.

What has this got to do with accountancy, you ask. Though it is usually expressed a little more politely, I would be amazed if I am the only accountant who has faced exactly the same pressures from clients.

In the audit arena, you might occasionally encounter an old client who in the face of bad times takes a few steps to beef up the balance sheet or hold profits to a level where tax is manageable. Auditors may be familiar with the stance that unless they sign a clean report on such clients, their business will be taken elsewhere next year.

The tax adviser’s equivalent can crop up when pressure is applied to put something that looks suspiciously like capital, like a Caribbean holiday for the family, through as a business expense deduction.

I am worried about where the country is going to go if this continues. In no time at all, we could be behaving in the same way as South American countries with tin pot dictators or, worse, Italy when that nice Mr Berlusconi was in his pomp.

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