The incoming president of the CIOT, Glyn Fullelove, has used his inaugural speech to stress the importance of maintaining high professional standards at a time of great ‘cultural change’ within taxation.
The development of professional conduct in relation to taxation (PCRT) by the professional bodies reflects how the tide has turned against highly artificial or contrived tax planning.
‘As president of the CIOT I will not hesitate to remind members of their obligations in this area; and if there are still members who seek to develop and promote such schemes, I have a simple message – this is not the body for you’, Fullelove said.
He stressed the positive message PCRT should send, providing reassurance that ‘advice received from a CTA is not only of the highest technical standards; it is also advice that will not find them locked into disputes with HMRC that could have at least a severely detrimental impact on their reputation’.
Large multinational companies have been those most affected by this cultural shift over the last decade. These businesses ‘now see tax as a key element of their risk register and are acutely aware of the reputational impact being seen as “aggressive on tax” can have’, Fullelove added.
However, Fullelove believes taxation of large companies in the UK is now ‘comprehensive and more robust than it has ever been’. He sounded a note of caution against further changes, such as those on digital taxation being considered by the OECD, that do not ‘weigh any additional yield against increasing complexity in the system’.
Against this background of a changing tax landscape for corporate businesses, Bryan Cave Leighton Paisner has carried out a survey of senior in-house tax professionals and finance directors to examine how HMRC’s tough stance on avoidance and evasion has affected how they approach tax risk and disputes with HMRC in practice. The survey covered a range of sectors, including real estate, financial services, insurance, chemicals, and media.
The report refers to the paper, Tackling tax avoidance, evasion, and other forms of non-compliance, published with the 2019 Spring Statement, confirming that HMRC has around half of the UK’s largest businesses under investigation at any one time.
The survey found corporate taxpayers allocating more resource and incurring more expenditure in dealing with tax risk and disputes, including through seeking professional advice, with 67% reporting a significant impact on their business from the increase in tax regulation.
When asked what steps they are taking to prepare for HMRC enquiries, 37% of respondents said they were seeking more professional tax advice, while 21% were engaging more with their HMRC customer compliance manager (CCM). While the relationship between large corporates and their CCMs is generally positive, a common theme from respondents was that CCMs are often limited by their lack of authority to make key decisions.
Delay on the part of HMRC was a major issue for businesses involved in tax disputes. It can take HMRC a long time to respond to taxpayer correspondence, engage in technical discussions or take substantive steps to move enquiries to a close.
Overall, the results of the survey found corporate businesses wanting HMRC to engage much more with them during enquiries and to finalise enquiries quicker. Respondents suggested the investigation process could be improved if HMRC engaged in technical discussions with taxpayers at an early stage and invested more time in understanding the nature of the taxpayer’s business. The report suggests that while HMRC’s litigation and settlement strategy encourages it to engage in discussions with taxpayers at an earlier stage, the responses indicated that this does not always happen.
The incoming president of the CIOT, Glyn Fullelove, has used his inaugural speech to stress the importance of maintaining high professional standards at a time of great ‘cultural change’ within taxation.
The development of professional conduct in relation to taxation (PCRT) by the professional bodies reflects how the tide has turned against highly artificial or contrived tax planning.
‘As president of the CIOT I will not hesitate to remind members of their obligations in this area; and if there are still members who seek to develop and promote such schemes, I have a simple message – this is not the body for you’, Fullelove said.
He stressed the positive message PCRT should send, providing reassurance that ‘advice received from a CTA is not only of the highest technical standards; it is also advice that will not find them locked into disputes with HMRC that could have at least a severely detrimental impact on their reputation’.
Large multinational companies have been those most affected by this cultural shift over the last decade. These businesses ‘now see tax as a key element of their risk register and are acutely aware of the reputational impact being seen as “aggressive on tax” can have’, Fullelove added.
However, Fullelove believes taxation of large companies in the UK is now ‘comprehensive and more robust than it has ever been’. He sounded a note of caution against further changes, such as those on digital taxation being considered by the OECD, that do not ‘weigh any additional yield against increasing complexity in the system’.
Against this background of a changing tax landscape for corporate businesses, Bryan Cave Leighton Paisner has carried out a survey of senior in-house tax professionals and finance directors to examine how HMRC’s tough stance on avoidance and evasion has affected how they approach tax risk and disputes with HMRC in practice. The survey covered a range of sectors, including real estate, financial services, insurance, chemicals, and media.
The report refers to the paper, Tackling tax avoidance, evasion, and other forms of non-compliance, published with the 2019 Spring Statement, confirming that HMRC has around half of the UK’s largest businesses under investigation at any one time.
The survey found corporate taxpayers allocating more resource and incurring more expenditure in dealing with tax risk and disputes, including through seeking professional advice, with 67% reporting a significant impact on their business from the increase in tax regulation.
When asked what steps they are taking to prepare for HMRC enquiries, 37% of respondents said they were seeking more professional tax advice, while 21% were engaging more with their HMRC customer compliance manager (CCM). While the relationship between large corporates and their CCMs is generally positive, a common theme from respondents was that CCMs are often limited by their lack of authority to make key decisions.
Delay on the part of HMRC was a major issue for businesses involved in tax disputes. It can take HMRC a long time to respond to taxpayer correspondence, engage in technical discussions or take substantive steps to move enquiries to a close.
Overall, the results of the survey found corporate businesses wanting HMRC to engage much more with them during enquiries and to finalise enquiries quicker. Respondents suggested the investigation process could be improved if HMRC engaged in technical discussions with taxpayers at an early stage and invested more time in understanding the nature of the taxpayer’s business. The report suggests that while HMRC’s litigation and settlement strategy encourages it to engage in discussions with taxpayers at an earlier stage, the responses indicated that this does not always happen.
