HMRC and PAC experts debate UK's tax system
“The tax system belongs to us all; it should not be the secret preserve of professionals. We should all be able to understand the system and be confident that it is administered fairly.”
That was the message to tax advisers from Dame Margaret Hodge DBE MP, former chair of the Public Accounts Committee (PAC), at the ICAS Tax Conference “Taxing Times”, held in Glasgow on 24 May.
The conference was chaired by Aidan O’Carroll CA, EY’s Global and EMEIA Leader of Compliance and Reporting Services.
Dame Margaret (pictured below), the opening speaker at the conference, said that the PAC, the House of Commons watchdog tasked with overseeing how the public purse is spent, became increasingly interested in the process of taxation and tax avoidance, partly thanks to revelations from whistleblowers and the media, including Private Eye.
The PAC called senior figures in industry and from HMRC to be questioned before the committee, but as Dame Margaret explained, the PAC has few powers other than to shine a light onto a particular area of public policy and practice.
She said: “We were accused of ‘grandstanding’. Of course we were grandstanding! That was what we were able to do… one thing we have achieved in the past five years is that people have started talking and thinking about tax. We asked the questions ordinary people wanted us to ask.”
She also called for more action to tackle British Overseas Territories that operated as tax havens, simplification of the tax system with fewer reliefs and for taxpayer confidentiality to be lifted, at least for large listed companies, to bring transparency into the process.
UK 'played a leading role in BEPS'
Also at the conference, Jim Harra, director general, business tax with HMRC (pictured top) gave an overview of the direction of policy regarding taxation of business. He said: “There is a clear appetite in Government for reforming tax.”
He said that the Government is looking to ensure that the UK tax regime is competitive, it is also looking to broaden its tax base, and he said: “While the Government is happy to justify a competitive tax rate, it is determined that businesses will pay the tax that is due.”
Jim Harra said the UK had played a leading role in the BEPS (Base Erosion and Profit Shifting) reforms, designed to ensure that multinational businesses paid the right amount of tax in the various jurisdictions in which they operate.
He added, however: “The BEPS project is now entering its most difficult phase – implementation – and we have to make sure that all our partners make the changes along with us. A lot of people will take the lead from us, so it will be important to pick the choice that we see is best.”
He also talked about the move to digital tax returns and improvements under way in HMRC’s customer service performance. Progress was also being made in implementing the Scottish Rate of Income Tax, with a final tranche of “S” code notifications going out to Scottish taxpayers in June.
Jim Harra said that HMRC has been working with the accountancy profession to help ensure that tax agents apply appropriate standards and to help modernise their relationship with the tax authorities.
He added: “We want to harness the key role you play.”
Avoidance and ethics
“Avoidance and ethics” was the topic of a panel discussion, chaired by Aidan O’Carroll (pictured below) and featuring Anton Colella, chief executive, ICAS; Charlotte Barbour CA, director of tax, ICAS; Ali Kennedy CA, formerly head of tax, Pearson and now head of tax, Sophos; and Bob Crawford CA, owner of accountants and tax advisers Jeffrey Crawford & Co.
The panel discussed the ICAS Power of One initiative, launched November 2015 and also Professional Conduct in Relation to Tax (“PCRT”), guidance issued in conjunction with AAT, ACCA, ATT, CIOT, ICAEW and STEP.
Ali Kennedy said that most listed companies, Sophos included, did not follow aggressive tax planning policies and added: “What would make my job easier is well drafted and clear legislation, not just in the UK but in all the jurisdictions in which we operate.”
Bob Crawford questioned whether, as Dame Margaret had argued, tax is a “moral issue”. He said: “Tax evasion is wrong – it’s illegal and the law is the law. But I don’t see any morality in tax, or even principles – just rules.”
Also at the conference, EY tax partner Laura Mair CA gave an overview of the Finance Act 2016 and the latest developments in Scottish tax; and Darren Mellor-Clarke, tax partner with Pinsent Masons considered current issues in VAT, including its future, as a “European tax”, in the event of a Brexit.
At the workshop sessions, Mazars’ Justine Riccomini gave an update on employment taxes; James Barbour CA, technical policy director with ICAS, explained the impact of financial reporting changes on tax; Craig Coyle CA and Mark Pryce CA, tax partners with Campbell Dallas, covered a range of tax topics from buy-to-let to share schemes; and Andy Young of HMRC’s Fraud Investigation Service explained what happens when a client is investigated for suspected tax fraud.
The ICAS Practitioners' Conference 2016 – The Inspirational Practice
This year’s Practitioners' Conference on 2 June 2016 will take as its theme “The Inspirational Practice” - the practice’s owners, clients and staff.