Mark Lee’s card trick – the real test of acceptability?

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The debate about tax and morality continues at AccountingWEB (which is a closed shop to those who do not register). I regret that much of the comment is simply ill-informed. But there are nuggest of wisdom creeping out which make perpetuation of the discussion worthwhile.

Take this gem from Mark Lee for example:

The more I think about this issue the more I think it comes down to whether one puts ones cards face up or face down on the table. Taking the dividend vs salary issue - the cards are face up. No problem on the morality scale. Taking actions to reduce a tax liability below that which it would otherwise be - are you prepared to make full disclosure of what you've done? If your cards are face down or are hidden in some other way - I can see why the authorities complain about such behaviour.

Trust a member of the Magic Circle to come up with a card trick as his definition of what is and is not acceptable behaviour - and yet I think this one of the most inspired pieces of writing on this I have seen for a long time. Put simply it says most of what is required (I say most because an exception is bound to creep out of the woodwork). And it summarises with much of what I spend a lot of time arguing, rather succinctly.

Why? Well look at these examples which follow on from this test:

  1. Companies have to account transparently to all jurisdictions to which they have a duty;
  2. Companies and individuals would have to offer the same information to all jurisdictions to which they submit accounts. That should nail a lot of transfer pricing abuses;
  3. If reliance has been placed on a an unusual interpretation of legislation or on interpretation of a judgment in an unusual way, it would have to be disclosed;
  4. All areas of doubt have to be highlighted in any tax return so that what are called 'discovery' assessments are not possible because non-disclosure has occurred;
  5. The beneficial ownership of all companies would have to be disclosed;
  6. The details of the settlors and beneficiaries of all trusts would have to be disclosed;
  7. All departures from GAAP would have to be disclosed.

And on it goes.

I think that's a great start Mark.

Could you pass the card trick test? If not why not.

PS KPMG can't - their Swiss 'co-operative' is a very strange entity which appears to make little or no disclsoure, but is of great importance to them as they hide behind it incessantly. Why, I wonder?

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