UK companies must disclose their tax risk

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Accountancy Age published an article under this title today. As the link is not available as yet, I've reproduced it here.

This is important. The US Federal Accounting Standards Board has produced a document FIN 48 on accounting for uncertainty in tax provisions. It only applies to US companies at the moment, but the reporting is almost bound to spread.

In broad terms what it says is that a US company has to now evaluate all tax claims it makes, and if the think that there's a less than 50% chance that they will succeed, assuming full disclosure of all facts in the case of an IRS audit then provision for the tax must be made.

I'm pleased to say TJN was one of only three organisations worldwide to lobby in support of this change. Over 100 companies objected in various ways. The result is they got the 50% marker, when it was 70% in the draft. On the other hand, the assumption of full disclosure was added, and that's vital.

Too many companies for too long have been playing games with tax without telling anyone, least of all their shareholders. In the meantime they have been abusing markets, their companies and society as a whole. This is a small step on the way to correcting that.