Dennis Howlett has been musing on tax over at Accmanpro. It's worth having a look at what he's thinking. I can see where he's coming from.

Now compare this with what KPMG say on Codes of Conduct for business taxation. They think that a code should have the following four elements within it:

1. A statement of objectives. There would be consultation on this point, but the principles to be included here might include the independence of the code and its enforcing body from sectional interests; responsiveness to changes in circumstances; and participation to be voluntary but as broadly based as possible.
2. A statement of standards. These would be positively drafted to identify best practice behaviours; would encourage participants to go beyond mere compliance with the code; and would anticipate situations that might arise and include appropriate safeguards.
3. Methods of monitoring. The standards laid down would need to be measurable in order to be monitored. Compliance with the objectives, especially that of independence, would also need to be monitored to ensure that the code was acting as intended.
4. Methods of enforcement. There would need to be clear consequences for non-compliance, quick resolution of complaints and a periodic audit of the effectiveness of the code.

This is quite interesting (apart from the fact that KPMG note that this might start out between the Big 4 and HM Revenue & Customs alone, which somewhat limits its use) for a number of reasons:

1. A statement of objectives seems to accept that principles are a part of this. In that case ethics are integral.
2. Encouraging people to go 'beyond mere compliance' seems to recognise that this is possible and desirable - i.e. the back stop is not the bottom line.

But let's move beyond this and ask some more questions:

1. Why is this being restricted to the UK? Many companies of concern are multinational, so why not make the Code the same?
2. Why seek to limit this to the larger firms? It seems likely that this will be driven by the companies as much as their accountant agents, although both need to buy into it;
3. Why keep this to tax? As I have noted on many occasions, and as Dennis rightly does, the accounting for tax is as important - should it not cover that as well? Otherwise this is half baked from the start;
4. Why not, if this is to be real make it into an assurance standard. This is something I have discussed with Accountability - and I think there is real scope in this area?
5. If it is an assurance standard, why not look at ways in which it can be used to create an international level playing field so that the same data e.g. on transfer pricing goes to all parties. This prevents the too common occurrence of a developed country being happy to have profits over-declared there whilst a developing country loses out from an abuse designed to limit profit in their country.

I'm pleased to say that over the next few months I'll be looking at these issues quite a bit as I've secured a contract to look at all these issues and more, and to develop a draft standard.

Which could be fun.