New research commissioned by energy firm SSE plc and ICAS, the leading professional body of Chartered Accountants, has exposed the credibility gap between the public and big business when it comes to trusting companies on their approach to paying tax.
The YouGov study that they funded found only a third of people think most big businesses in the UK pay their fair share of tax, compared to four out of every five people believing small businesses do.
Just 6% would trust a company to provide accurate information on whether they are paying the right amount of tax and only 10% think it is acceptable for companies to move their base of operations abroad to avoid paying corporation tax in the UK.
As SSE said:
The findings reflect concern that seven years after the economic crash, big business has still not done enough to rebuild trust and recognise their essential role in contributing in the right way to the society they rely on to be successful.
The results have been released ahead of a debate on ‘The good corporation and its role in modern society’ in London tonight (June 9th).
I should, of course, declare a mild interest: SSE is the first FTSE 100 company to have a Fair Tax Mark.
SSE Chief Executive, Alistair Phillips-Davies said in advance of the debate at which he is speaking tonight:
These findings from YouGov offer an alarming insight into the relationship between company behaviour on tax and consumer trust. Big business has a major job on its hands to convince the public that it is paying taxes fairly. The consequences of not doing so go to the heart of our legitimacy within the societies we serve.
Tax is not a penalty for profit; it is the proper way to contribute to the society that enables your business to be successful.
Paying the appropriate amount of tax, in the right place and at the right time is core to this; and at SSE we remain determined to abide by the spirit and letter of tax regulations. We have explicitly ruled out the use of artificial tax avoidance schemes and tax havens; we have disclosed much greater tax detail on our accounts and last year we were the first FTSE 100 company to be awarded the Fair Tax Mark.
Jim Pettigrew CA, President of ICAS (Institute of Chartered Accountants of Scotland), said:
The survey demonstrates that big business has got a long way to go to convince the public that companies have earned their trust on taxation. Ensuring companies behave in the right way and improving transparency and communications are key to changing this perception. There is a difficult mountain to climb for business and the profession to explain the tax landscape to the public.
This is why I think it vital that the profession engage with the Fair Tax Mark.
Poll findings supported that view. The YouGov poll questioned almost 2,000 adults seeking their views on what is acceptable and unacceptable behaviour by big companies when it comes to managing their tax affairs and how a company’s attitude to tax affects their trust of that company. The headline findings include:
- Just one third (34%) of individuals believe that most big businesses in the UK pay their fair share of tax, whereas four out of every five people (80%) think that small businesses do.
- Over half of people (57%) state that the way a company pays their taxes affects their trust for that company.
- Only 6% of people would trust a company to provide accurate information on whether they were paying the right amount of tax – 43% would trust an independent accreditation such as the Fair Tax Mark (second behind HMRC at 47%)
- More than two thirds (69%) of people think the government should consider how a company’s ethics, how they pay their taxes and the value for money and quality of service when awarding contracts.
- Just 10% of people think it’s acceptable for a company to reduce its corporation tax by moving its base of operations to a country with a lower corporation tax rate.
These findings are further confirmation of the broad public concern on these issues.
What surprised me, I admit, was the very poor status of auditors and the high standing of the Fair Tax Mark despite, I admit, being relatively little known as yet. The Big 4 must be in really deep trouble if their standing is so low whilst HMRC can also take little comfort when fewer than 1 in 2 people were willing to believe them.
This confirms for me three things.
The first is that it was right to put effort in the Fair Tax Mark.
The second is that from of HMRC is overdue. An Office for Tax Responsibility is urgently needed.
The third is that the tax profession needs to talk much more openly to tax activists about what it is that they need to do to get things right henceforth.