Whose fault is complexity?

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PWC's report for the World Bank, on which I have already commented, included the following observation:

A particularly worrying consequence is that with the sheer volume of tax legislation no one individual can possibly read all of it; and so the days of a tax director being confident of spanning all the relevant parts of the tax code seem to have all but disappeared. Similarly, at least as regards advising large to medium.size corporates, the ability of a single tax adviser to span all the relevant tax legislation is circumscribed, hence the increasing relevance of specialists and sub-specialists.

Well, I thought about this, and did a quick company search. That was of a UK bank - Royal Bank of Scotland Group PLC. For your benefit, the annual return form is available here. Look at this list of companies in which that bank has an interest of more than 10%. To save you counting, give or take there are between 1900 and 2000 of them (I extrapolated, so I'll allow a margin for error).

Let's get serious here. I guarantee you no one in RBS knows the name of all of them. No one in RBS has read the accounts of all of them. The audit partner who signs the accounts (it's Deloittes by the way, but it doesn't change the message) will not have read them all, let alone have heard of them all. Nor will the directors who sign off the group report. No one in RBS's central tax department will read all their tax returns. Why can I be so sure? Well the accounts probably come to 28,500 pages a year (at 15 pages a set on average, which is not hard to achieve) and the tax returns plus computations will be somewhat longer, I expect.

But did anyone require RBS (or any other large quoted company of this sort) to create this complexity? No, of course they did not. They chose to create it. And they can manage it, quite routinely. Without reading it all, even though they're legally responsible for it.

So can we have less of this nonsense about complexity please? The complaints are bogus. Big business can handle complexity. It thrives on it. As this evidence proves.


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