Having been out of action fo9r a few days, let me return with an issue that seems worthy of comment even if from another day's headlines. It combines three rich themes: Davos, tax avoidance and the Big 4 accountants. As the\u00a0Telegraph\u00a0reported a day or two ago:<\/p>\n
Responding to calls for companies to \u201cpay their fair share\u201d, Mark Otty, Ernst & Young\u2019s managing partner for Europe, Middle East and Africa, claimed a moral tax code would not work as companies had a duty to pay the lowest rate permitted.<\/p>\n
Speaking at the World Economic Forum in Davos, Mr Otty told The Daily Telegraph: \u201cThe only way you can resolve this issue is through a legal code. I don\u2019t see how you can have any assessment on payments of tax other than what is in the statute. The simplest solution is to stop banging on about morality and change the law. \u201d<\/span><\/p><\/blockquote>\n
It's a shame that Mr Otty shows himself to be quite as ignorant as he obviously is on the legal duty of companies. For one in such a position you would think he'd know some basic law. But he doesn't. The fact is that there is\u00a0absolutely\u00a0no legal obligation at all for a\u00a0company\u00a0to avoid tax, or even reduce its tax bill. I've explained why her<\/a>e, with reference to UK law. There is, however, a moral obligation imposed by law on directors to\u00a0use\u00a0their best judgement on the issue: something Otty ignores.<\/p>\n
And as for a legal code - he can have one. It's called\u00a0Michael\u00a0Meacher's\u00a0General Anti-Tax Avoidance Principle Bill<\/a>. If he'd like to support it he'll be welcome. But I don't think that's what Otty meant at all. What he also said was:<\/p>\n<\/div>\n
\nE&Y would not be changing its tax practices.<\/span><\/p><\/blockquote>\n<\/div>\n
\n\u201cIt comes back to the law,\u201d he said. \u201cA company has responsibility to its shareholders, its staff and society.<\/p>\n
\u201cIn days gone by it was a much easier argument. Now there is this morality test. For an organisation, it becomes very difficult ... you don\u2019t know what the rules are or who the arbiter is.\u201d<\/p><\/blockquote>\n
Poor Mr Otty: the instruction \"do not cheat\" is tough, isn't it?<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"