As HM Revenue & Customs (HMRC) publishes a new list of ‘deliberate tax defaulters’ and reiterates the Government’s pledge to crack down on firms that avoid paying the tax they should, the Confederation of British Industry (CBI) has drawn up a new statement of tax principles for business.
According to the CBI, although UK businesses make a huge contribution to the UK economy, often the way they conduct their tax affairs leaves something to be desired, and they should improve the reporting of their tax payments to the public.
Firms should therefore aim to be more transparent and use narrative reporting so that people understand why they have paid the amount they paid and how they arrived at that figure.
The report they publish could include an explanation of their policy for tax management and the governance process that applies to tax decisions, as well as some detail on the amounts and type of taxes they have paid.
The objectives of the statement of principles are to enhance the co-operation, trust and confidence between HM Revenue & Customs (HMRC), UK business taxpayers and the public in regard to the operation of the UK tax system and to promote the efficient working of the tax system so that it can fund public services and promote sustainable growth.
The actual principles laid down by the CBI are that businesses in the UK should only engage in reasonable tax planning aligned to commercial and economic activity that does not lead to abuse of the system. They should also co-operate with HMRC.
In addition, firms engaging in international activity should follow the terms of the UK’s Double Taxation Tax Treaties and guidelines on such matters as transfer pricing as well as engaging constructively in international dialogue on the review of global tax rules.
London accountant, Darren Specterman specialises in providing corporate tax advice and guidance.