I was asked to give evidence at a hearing of the EU parliament’s PANA committee yesterday, which is considering issues relating to money laundering, tax evasion and tax avoidance arising partly as a result of the Panama Papers leaks. I offered opinion on three issues.
The first was self regulation by the accountancy profession. I made it quite clear I was opposed to it. I do not believe the profession is remotely close to having the objectivity required to undertake this task. I also made clear that its professional ethics remain, despite recent tax changes, far too obsessed with protecting the profession and the client rather than protecting the public interest.
Then I made clear that whatever the concern about tax havens, focus should also be given to the appalling record of the UK. Reiterating evidence given to the Lords on Monday and based on my own research I made clear that 400,000 companies fail to file data required by company law in the UK each year and go virtually unpunished as a result whilst HMRC get only 80.4% of the corporation tax returns they ask for and that they fail to ask for maybe half a million more when they might be due. In this case I said the uK was going to make a massive mockery of automatic information exchange because it is taking no effective steps to collect the data required for that system to work.
Third, in a presentation lasting less than ten minutes, I talked about country-by-country reporting. The following were my speaking notes on this one (the others were unrehearsed):
- I would like to add some comments on Country by Country Reporting
- You all know what this is
- You all know that a long time ago I thought this whole idea up
- You know what it does
- I want to talk about why it’s been so hard to get it
- This is for three reasons
- First the accounting profession is almost universally opposed to their clients being accountable
- Next that has meant that they have blocked CBCR becoming an accounting standard through the conventional mechanism of being an International Financial Reporting Standard. They say that can’t be done because this isn’t data investors need. The U.K. Local Authority Pension Fund Forum with £190 billion under management would beg to disagree
- And thirdly they say this is solely tax data so it need not be published. Well it isn’t because no one is planning to use it to tax anyone. In that case it can’t be.
- This then is accounting data that the Big 4 firms – who are the one consistent presence in every major tax haven in the world – don’t want you to see
- So I beg you: ignore them
- Demand CBCR as a full part of accounts
- Demand more than the minimum possible – the OECD template that is solely concerned with profit shifting – and instead demand that global companies be truly held to account for all they do locally
- And insist that the IFRS work with civil society to define required disclosure under this standard or please, cut off their funding because they would not then be working in the public interest.
- You can do this. It is something you will, I hope recommend because CBCR will deliver more accountability for global companies than anything rise has ever done, and if there is a pressing political need in the world right now this might just be it.