The Daily Telegraph is among the papers reporting doubts in the accounting profession about the attack on tax evasion being promoted by HM Revenue and Customs as their counterbalance to cuts. As they note:
Stephen Herring, senior tax partner at accountants BDO, said: “Every Chancellor says they will clamp down on tax evasion, but they always find it more difficult than they thought.
“Everyone wants to stop people from hiding their income in offshore accounts and it is right and proper that they devote resources to that and there has been some success.
“But the revenue is sometimes using the word avoidance to apply to any tax planning that is not in writing. This cannot be the case and the revenue needs to be very careful. It cannot stop businesses and individuals planning their tax affairs or they will move their investments to other countries.”
Similar comments are reported from KPMG and Baker Tilly.
I deeply resent being a member of a profession that says this sort of thing: that implies that of course tax evaders should be pursued but if we push them too hard people will leave the country. And anyway, they imply, it is the Revenue's job to leave smart accountants alone.
I would remind a profession that the National audit office recently noted that the tax returns of those who used accountants were more likely to include mistakes than the tax returns of those who did not.
And I would remind the profession that whenthe biggest firms of accountants are be found in every tax haven in the world it is entirely appropriate that scrutiny be turned on them. They are only there to sell tax avoidance services. They can claim for ever that they are legitimate,but that is only proven when a tax authority has had the opportunity to appraisethe schemes that are being put in place.As a consequence of the secrecy in many of these jurisdictions that is not always possible.
I'm sorry to say it, but the profession has a long way to go before it can criticise the activities of the Revenue in chasing tax evasion. When, and if, the profession is seen to be promoting tax compliance then they can criticise the actions of the Revenue. Until thenthe Revenue should rightly consider the profession to be the enemy, because to put it bluntly, in far too many cases they are.
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They aren’t saying that HMRC shouldn’t go after the evaders, they are complaining that conflating avoidance with evasion is unhelpful. You combat evasion by going after the perpetrators, and this is entirely right and I think you and I agree that tax evaders should be vigorously pursued, taxed and punished.
Hitting taxpayers with a big stick is not the way to deal with tax avoidance however. You combat avoidance by changing the law so that tax avoidance doesn’t work any more. Simply enact some clear, unequivocal, well thought out legislation and large scale tax avoidance of the type you abhor will not be possible. Sadly much of our recent tax legislation has been an appalling mess, and avoidance flourishes under such legislation.
@Adam
I note what you say but cannot wholly agree with it. Of course I’m in favour of abolishing the domicile rule. Of course I’m in favour of changing the residence rules. I want a general anti-avoidance principle. I want a raft of new purposive legislation. I want clearance procedures. But nothing on earth will change unless the tax profession begins to see that abusing any rule is antisocial, unacceptable and contrary to the spirit of the law itself. Tax compliance is a fundamental requirement of this as yet I see no hint that the profession is adopting this stance
And just how do you ascertain what the spirit of the law is.
@JayPee
You read the law. You seek the opinion of others if in doubt. and on each and every occasion you seek, when there is any concern about interpretation to stay well inside the potential parameters of risk, always, as a result, ensuring that you, or your clients, or beyond reproach with regard to the interpretation that you use.
It’s not hard.
I have done it over many years.
It mitigates risk.
Most importantly, it lets you or your clients get on with the much more important business of generating income. What a waste to believe that this is created by maximising tax savings. The poverty of thinking inherent in that approach beggars belief
“Most importantly, it lets you or your clients get on with the much more important business of generating income. What a waste to believe that this is created by maximising tax savings. The poverty of thinking inherent in that approach beggars belief”.
Nicely said Richard. Have you thought of repeating that to the CBI or IoD? I’d love to know their response.
@sickoftaxdodgers
Thanks
I note JayPee has not responded
I doubt the CBI and IoD would either
If legislations was properly drafted, interpreting tax statutes with immediate consideration to what the spirit may or may not be would be unnecessary.
Sadly that is a pipe dream:
I think you are right (this time!) for the open examination of the activities of Accountancy firms in tax havens.As an Accountant having UK
taxpayers as clients I cannot say that the UK tax system approaches anyway near fair whilst this kind of institutionalised cheating goes on.