Accountants can help reduce the UK’s £34bn “tax gap” by making company accounts clearer, including their clients’ foreign transactions, and educating small and medium-sized enterprises about paying the right amount, the Association of Accounting Technicians (AAT) has said.
SMEs account for £16.5bn of the tax gap − the difference between what HMRC says it should collect in theory and what it actually collects.
Mark Farrar, chief executive of AAT, said that although accountants are already playing an active role in educating and supporting SMEs about the importance of paying the right amount of tax, they can do more.
Accountants can be more vocal about their “ethical stance” on tax, he said.
AAT requires all members to employ only appropriate and responsible use of arrangements to mitigate tax due.
One of the benefits of the recent glut of news stories about tax avoidance is that there is a greater understanding of the public benefits of the tax system, Farrar said.
AAT research of 2,000 UK consumers found that:
- Seven in ten say consumers said that their purchasing decisions are influenced by a company’s ethical behaviour
- 43% said that whether a business avoids tax would be an important consideration when deciding whether or not to use its goods or services
- Consumers also said that transparency about company accounts (36%), a strict ethical code about their supply chain (39%) and being careful with sensitive client data (43%), were also ethical considerations when they were deciding which businesses to buy products or services from
- And the research also found that consumers were willing to pay more for a product or service provided by a company that was open and treated its employees well
“Having a strong ethical code and not engaging in aggressive tax avoidance can result in increased profits for businesses, as well as a reduction in the tax gap because consumers are displaying an appetite for engaging with companies who are good corporate citizens,” Farrar said.
The main pressures affecting management accountants’ ethical conduct in the UK occurred when they were working with colleagues from different functional areas within the organisation (20%) and when facing reporting deadlines.
“Many finance professionals are facing pressure to condone poor practice of their colleagues or to behave unethically themselves,” said Tanya Barman, CIMA’s head of ethics.
“The report highlights that we are still struggling to work our way through a crisis of culture within business, and we need to maintain our focus. Our study shows that we can no longer afford to think of ethical performance in business as just a compliance issue.”