Cooperatives UK have issued the following press release that I am pleased to share:
The UK co-operative sector, worth £37 billion to the British economy, has agreed a partnership with the Fair Tax Mark, an initiative that enables businesses to demonstrate to consumers that they deal with tax transparently and fairly.
In the context of tax avoidance by large companies such as Starbucks and Amazon — which research confirms is the public's number one concern about business behaviour1 — the commitment from this sizable sector is of significance.
A number of pioneering co-operatives signed up to the Fair Tax Mark when it was launched last year. These include Midcounties Co-operative, which runs retail, energy, travel and funeral businesses and turns over £1 billion a year and made £22 million in operating profit during its last financial year; and the Phone Co-op,-a fast growing home and broadband co-operative founded 16 years ago, now turning over £11 million.
It was agreed at the co-operative sector's annual conference that it would forge stronger links with the Fair Tax Mark. A formal partnership between the Mark and Co-operatives UK, the network for Britain's thousands of co-operative businesses, will be announced at an event for leaders of the largest retail co-operatives in the UK taking place this weekend, the National Retail Consumer Conference.
As part of the partnership, co-operatives across country will be provided with a set of voluntary guidelines and be supported in adopting the Fair Tax Mark if they choose to.
Ed Mayo, Secretary General of Co-operatives UK, said:
“Tax avoidance is the number one public issue today and what the Fair Tax Mark offers customers is a way to judge where they spend their money. With tax income tight and austerity the dominant response, it would be wonderful to make fair tax the norm for large businesses over the next ten years.
“Co-operatives have always been market leaders on issues of fairness, whether it's working hours, Fairtrade or ethical investment practices. As home-grown businesses, not a single co-operative we know of has engaged in aggressive tax avoidance. That's why we are seeing the sector coming together to lead the way on fair tax.”
Ben Reid, Chief Executive of Midcounties Co-operative, said:
“The Institute for Business Ethics recently found that tax avoidance is now the number one concern of the public when it comes to business conduct. As a values-led and ethical organisation, we believe that we should pay the taxes that are due and not engage in aggressive tax avoidance schemes, even if legal.”
Richard Murphy, tax campaigner and Fair Tax Mark director said:
"The UK public now think that paying fair tax is one of the most important things a business can do. They rightly expect business to pay its share, as they do. In that case to have a whole UK business sector declare its support for Fair Tax is really good news. The UK public will now know that co-ops are committed to paying their tax, and I hope they reward them with their business as a result."
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A couple of questions about the Fair Tax Mark if I may please:
1) How does FTM maintain fair and transparent decision making on issues like the awarding/refusal to award the mark? Or the licensing of accountants (or cancellation of the licences) — either decision can be taken by FTM at a whim (clauses 9 and 15 of the T&Cs).
Given the involvement of ECRA (a campaigning organisation), it would seem the above decisions are vulnerable to interference. ECRA could be embarrassed by the award of the Mark to a company whose face doesn’t fit — perhaps a company on its boycott list. I could also see them wanting to cancel the licence held by accountants who habitually award the mark to such companies.
Does a company or accountant have a right of see the reasons for a decision and to appeal it?
I can’t answers to any of these on the website — is there a link to the right page?
(I don’t know ECRA so I am not casting aspersions – but they don’t look independent, so I am trying to understand the protections in place).
2) Why (in your T&Cs) do you forbid the awarding of the Mark to a company which is ‘currently in serious dispute with HM Revenue & Customs’ (clause 6e)? It presumes the taxpayer is guilty. That doesn’t seem fair — presumption of innocence and all that.
3) Clause 10 says ‘Neither party will publish any correspondence between us excepting to your client.’
I can understand why FTM should observe confidentiality, given correspondence is likely to contain confidential information of the accountant’s clients. But I can’t see why the accountant should owe any duty of confidentiality to FTM.
Thanks for your questions
1) I think we’re incredibly transparent. We publish our programme. But no, we don’t publish the completed forms. That puts us far ahead of the accounting profession though. We also explain our decisions to those involved. So far every assessment has demanded change from those accredited. All have agreed to make them to get accredited. If they don’t make changes they can back out and fees are considerably reduced. That’s the contract. No one has to enter into it. If there are real problems we tell people in advance. We have rejected some approaches.
2) I think the condition is self explanatory. If you want explanation, it’s to prevent us suffering reputational risk. Why should we want to take that?
3) That’s because we think client confidentiality is important. And we make it a contractual term. No one has to sign it.
Thanks for the reply.
1) If you’re measuring FTM’s transparency against accounting firms, you’re not competing against a high bar. Local government is pretty secretive, but we do better than that! From what I can see on the FTM website (the only public information I can find), FTM’s levels of transparency wouldn’t get past the boss where I work.
FTM can do what it likes. But if it wants to credibly hold out transparency as one of its values, it has some way to go (e.g. decision making processes, appeals etc.).
2) Am not sure you answered the heart of my question: what stops ERCA interfering with a decision regarding licensing or dealings with an accountant which goes against its own agenda?
3) Am not sure I understand your reply to the point I made about excluding companies simply in dispute with HMRC, which seems manifestly unfair. Are you saying the reputation of FTM trumps fairness to applicants? Really?
4) Am not sure I understand your reply about confidentiality. I would expect you to observe client confidentiality, and I thought I made it clear.
My question is: why should the accountant owe a duty of confidentiality to FTM? His/her only confidentiality obligation is to the client — not FTM. I correspond regularly with members of the public in the course of my work (local authority). I observe confidentiality in their correspondence to me. But the person I am corresponding with can publish the correspondence in the Times if they want to (with exceptions). And if it makes me look stupid, that’s my problem.
The clause in the FTM T&Cs suggests a mind-set of secrecy. It is overstating things to call it an anti-whistleblowing clause, but it is in that direction. If openness is part of the mind-set of FTM, then change that clause — make it a 1-way obligation only. And if the accountant or the client wants to publish dealings with FTM in the Times, let them!
Adrian
Thanks for your comments.
I note your comments on transparency and whilst I do not agree with them, because we have been incredibly open with our processes, publication of draft standards, inviting commentary, and so on, I will ensure that they are shared. What you seem to be forgetting is that many companies would not engage with us if the process was as transparent as you would wish for.
ECRA are entitled to offer opinion, but the board can disagree and if it does, it will. If there is disagreement we would also ask our advisory group.
Regarding your third point, I am saying that the integrity of people who already hold the FTM does trump a duty to new applicants. We are not going to compromise those who already hold the standard by reducing its value.
An accountant would owe a duty of confidentiality to FTM because under normal contractual arrangements, such duty is owed, and we’re entering it into a contractual arrangement. And as we would only correspond with an accountant about client we cannot quite see what other issue you might be raising. The fact that we are willing to openly discuss standards, etc, is apparent and as such I think you’re missing the point.
Richard