The Fair Tax Pledge: What you need to know
Susan Cattell, Head of Taxation (England and Wales), outlines the key facts about the Fair Tax Pledge and the implications for tax advisers.
The Fair Tax Pledge was launched in June 2015 by Fair Tax Mark at their first conference.
Individuals and unincorporated businesses can sign a pledge to show their commitment to doing the right thing when it comes to tax.
Individuals state that they believe that tax is the price we pay for a civilised society and pledge:
- To declare all their income (and that of any companies and trusts controlled by them) openly, honestly and on a timely basis.
- Not to use tax havens to reduce tax due.
- Not to use tax avoidance arrangements requiring disclosure to any tax authority or that fall foul of general anti-tax avoidance rules.
- Not to enter into any arrangement that might reduce the tax they (or companies and trusts controlled by them) owe in a way that the law never intended.
- To inform their accountant or tax adviser that the pledge has been made and ask the adviser to help them (or any companies and trusts controlled by them) to comply.
Is there an assessment process?
Once the pledge is signed the individual receives a logo to display on their website, Facebook page or even their window. There is no audit or assessment process so the person signing the pledge is responsible for the accuracy of the statements made.
Advisers may find that they are approached by clients who have signed the pledge and asked to help ensure that they comply. They may want to consider whether this affects their terms of engagement for these clients.
Fairness and tax
ICAS has issued six principles which ought to underpin a sustainable tax system.
One of the principles calls for simpler, better legislation because it is the law which determines the tax HMRC can collect.
HMRC has no power to collect sums based on money being tight, nor on prevailing practice by tax advisers, nor on a subjective concept of "fair share", but by what the law determines.
Paying the right tax means that the law has to be right which means clear and unambiguous drafting of parliament's intentions.