Statement on tax avoidance and evasion
ICAS has called for a clearer long term strategy for the UK tax system.
The ICAS Technical Policy Board's six-point action plan builds on a series of calls made to the political parties in the ICAS General Election manifesto, Counting on Change.
The Statement on Tax Avoidance and Tax Evasion issues challenges in a range of areas, including effective legislation, high standards of behaviour and greater clarity, and is published in the run-up to the ICAS Tax Conference in Edinburgh on 21 May.
The debate on tax burdens, tax avoidance and tax evasion should be an informed and serious one, focussing on effective solutions to build a sustainable tax system, fit for the UK in the 21st Century.
Six key components must be addressed and ICAS calls on its members, politicians, commentators and the public to align future efforts to solve these.
The law must work properly
We must have simpler, better legislation because it is the law passed by parliament that the courts apply and determines the tax HMRC can collect. HMRC has no power to collect sums just based on money being tight, nor just on prevailing practice by tax advisers, nor on a subjective concept of "fair share", but by what the law determines. The accepted principle of us all paying the right tax at the right time has been overshadowed recently, but the right tax means the law has to be right; this means clear and unambiguous drafting of parliament's intentions.
High standards of behaviour are required all round
From CAs, tax advisers, tax administrations, businesses and individuals, ICAS members are governed by a Code of Ethics and the Professional Conduct in Relation to Taxation guidelines. ICAS supports measures being introduced by government to ensure all those involved in giving tax advice should be qualified and part of the regulated environment. Regulation will not solve the issue of poorly drafted tax laws.
Better information is needed
The public at large deserves to be better informed on tax, with clear explanations being given of business tax complexities and current tax practices. The media bias towards historic and extreme cases is misleading taxpayers as to current levels of tax compliance in the UK. ICAS also has a responsibility in educating and informing the public.
Tax policy needs clarity
Governments need to be clear on the underlying principles which govern their tax policy approach. They also need to be clear on which taxpayers benefit from their tax policies and why; for example when tax relief for high earners or large corporates supports business investment or employment creation.
Businesses need to be transparent
Businesses should consider providing accessible and coherent narrative explanations of their overall tax contributions (not limited to corporation tax) in their Annual Reports.
Criminal tax evasion needs greater focus
The debate on tax avoidance vilifies those operating in a legal fashion, whilst ignoring the systematic criminality of those in the black economy. We need to get our priorities clear and focus on the fact that tax evasion costs a lot more than tax avoidance. HMRC should publicise the top 10 things the public can do to tackle evasion, in the same way as they did for avoidance.