I was intrigued by a comment that I noticed had been posted on AccountingWeb. In response to comments that I had posted Steve Pipe, who advises accountancy firms on how to maximise profits, said:
the only thing we really differ on is the judgement call as to what constitutes "acceptable tax planning".
You clearly take a very principled (and extreme) stance on this - which I respect - in that you believe that anything other than what you label as "tax compliance" is immoral.
I on the other hand take a different (and I think more moderate) stance
I always find it odd when I am described as an extremist. Tax compliance is in my definition paying the right amount of tax (but no more) at the right time and in the right place where right means that the economic substance of the transactions undertaken accords with the form in which they are reported for taxation purposes.
To put it more straightforwardly, I am saying that people should pay the tax that they owe.
What I want to know is what is extreme about that? It seems to me that this is exactly what society expects of each and every person who lives within it.
What I also want to know is what a more moderate interpretation of this might be? Could it be that a more moderate version might mean paying most of the tax you owe, with some of it paid in the right place and at least part being paid when due to, with no structure being used being so abusive that it might land you in court? I think that a reasonable approximation, and to be candid one which many accountants would endorse, although I am not saying that Steve Pipe does.
But ask yourself this: which of these is ethical? Which of these can sustain our society? Which of these shows respect for the law? Which of these could be honestly upheld?
The answer is obvious.
I am not an extremist. I am just asking that people do what they would expect of others. Unless, of course, that other person was an accountant. Only in their distorted view can I be described as 'extreme'.
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Richard
A lot of your arguments do revolve around morality and people doing the right thing. But isn’t it that the companies are not immoral (nor are markets), they are amoral.
Nobody is paying tax that they do not legally have to pay (including people who think that their income tax is too low for society’s sake). Companies who use tax havens are doing so because they don’t have to do something which would cost them more money (not use tax havens).
Is it not that we need to concentrate on change by the government who regulate companies and markets (or should), rather than try to impose a morality on things which cannot take those characteristics?
I would be very interested in your ideas on this.
Thanks
James
The only slight problem is that you say that people should pay as much tax as they can, not the tax that they owe – you seem to exist in some Alice in Wonderland world where people take no tax advice and implement no tax planning and hand over money to our (incompetent) governments, hand over fist!
In the real world which I suggest you visit, of course people should pay the tax they owe and no question about that. Tax evaders must be punished. But equally no-one has to pay more tax than they owe and if there are legitimate strategies to reduce tax, they should be free to implement those strategies until such time as they are not legitimate.
James
We are happy to accept that companies are moral beings when it comes, for the example, to not trading in addictive drugs.
We are happy that they have codes of ethics.
We are happy that they pursue CSR
We expect them to have a fair employment policies
But when it comes to tax they are apparently amoral
Why do we accept that they are different in this one area?
I do not believe they are. I think it is an excuse.
Can you justify it?
Richard
Phil
Not once, not ever, have I said a person should pay more tax than is required of them.
My definition of tax compliance is simple. I say that a person is tax compliant when they pay the right amount of tax, but no more, in the right place and at the right time when right means that the economic substance of the transactions that they undertake are correctly reflected in the form in which they are reported for taxation purposes.
Please read what I say. Then some of your own comments might make sense.
Richard
Richard
A company is not something capable of morality. Only the people in charge or working for those companies are capable of morality.
Companies don’t make money from drugs because it is illegal. If drugs were legal there would be many, many companies making money from them. (Fancy a cigarrette?)
Fair employment policies only exist because to do otherwise would be illegal. If legislation wasn’t in place there would be very many unfair employment policies. And there are many companies who don’t give two hoots for CSR or codes of ethics (most of which will get ditched in a recession).
Morality is both an inapplicable way of approaching this problem and alienating for many people. Most people don’t like paying tax and most people don’t like being told that their feelings are immoral. My concern is that your important message is being drowned out by the finger wagging.
It’s my view that we need to concentrate on changing the law and accounting practices and not try to bash the same people we need to get on board to change things.
Keep up the good fight,
James
I am afraid that I can find little logic in your argument
Those who argue for corporation tax cuts say that companies do not really exist. They say they are only made up of real people. And yet you are arguing that those real people cease to exist the moment they walk through the office door, at which time they leave their morality behind.
I do not believe that.
I think companies are as moral as any other person in the community. Of course, that means some will be immoral. but it is impossible for those who run these corporations to say that they can be excused that because they undertake their activity through a corporate entity. the same is true of anyone who says that that entity should be amoral. that is an excuse for abuse. abuse does follow from it.
I entirely agree with you that we do need to concentrate on law and accounting practice to tackle this problem. But we should never forget that when doing so we are tackling a moral deficiency on the part of those who run our major companies and who work in our professions.
That is not an observation. That is a fact
Richard