One minute with Stephen Herring, head of taxation at the Institute of Directors.
Tell us about the IoD membership. What are their key tax concerns?
We have over 33,000 individual members throughout the UK and across all business sectors. Our membership is focused upon mid-sized business with, say, 50 to 500 employees although we also have many directors of both FTSE350 companies and microcompanies as members. We are particularly pleased with the progress our network for younger (under thirty-five) entrepreneurs, ‘IoD99’, has made since its launch in 2014.
Our top three tax concerns, in no particular order, are: (1) the need for bold, rather than piecemeal, tax reforms to simplify and reduce business (and personal) taxation; (2) the imperative to be vigilant in ensuring that the UK is second-to-none amongst leading European and global economies in providing a competitive, business friendly tax environment for both global entrepreneurs and foreign direct investors; and (3) ensuring that the UK does not implement the BEPS outcomes on a more aggressive basis than its key global competitors, including the USA.
Where do your members stand on Brexit?
Our members were more divided than those of some other business organisations with a majority backing ‘Remain’ but 30% backing ‘Leave’. We decided, rightly in my view, not to come down on either side of the fence but to challenge the assertions made by both sides during the EU referendum. Since the referendum, our members have demonstrated how resilient UK businesses are and they have continued to expand, to recruit and, indeed, to increase the pay of their employees. We are continuing to ‘drill-down’ to the key issues and opportunities each sector faces but will not adopt a position on the right option the government should pursue in the negotiations and certainly will not do so before article 50 is filed. For the avoidance of any residual doubt, personally I voted Leave.
What’s your view on ‘making tax digital’ and HMRC resourcing?
We consider that it is imperative that HMRC vigorously pursues its MTD initiative and, indeed, some of the opposition to it appears to be somewhat ‘Luddite’ in the criticisms. Nevertheless, we agree that micro-businesses ought to be brought into MTD on a generous timescale with minimal, if any, penalties during the roll out. In addition, HMRC will need to have due regard to those individuals who will always struggle with digital platforms.
We do not consider that HMRC’s workforce ought to be increased. We have not seen any reliable evidence that HMRC is under-resourced. Some countries, such as the USA, appear to employ far fewer people pro rata to the size of their economies. The politicians should assist HMRC’s resources by simplifying and, indeed, repealing some taxes. No chancellor has really tried this since Nigel Lawson.
If you could make one change to UK tax law or practice, what would it be?
Whilst I fully support (as does the IoD) the legislation and initiatives introduced by recent governments to curtail tax abuse and aggressive avoidance, it should be understood that both businesses and individual taxpayers ought to be allowed, indeed encouraged, to mitigate their tax liabilities through authentic tax planning. HMRC should be instructed to prepare a guidance note on this with a list of what they will not regard as tax avoidance.
Comment on a recent market trend.
Whilst understandably more column inches in tax technical publications on BEPS in the last year, I think the much larger tax issue facing the powers-that-be is the move to a more flexible economy as the traditional division between employment and self-employment becomes increasingly less relevant. The UK must ensure that we embrace the flexible economy, and design and implement a tax system that will assist its growth, not restrain it.
One minute with Stephen Herring, head of taxation at the Institute of Directors.
Tell us about the IoD membership. What are their key tax concerns?
We have over 33,000 individual members throughout the UK and across all business sectors. Our membership is focused upon mid-sized business with, say, 50 to 500 employees although we also have many directors of both FTSE350 companies and microcompanies as members. We are particularly pleased with the progress our network for younger (under thirty-five) entrepreneurs, ‘IoD99’, has made since its launch in 2014.
Our top three tax concerns, in no particular order, are: (1) the need for bold, rather than piecemeal, tax reforms to simplify and reduce business (and personal) taxation; (2) the imperative to be vigilant in ensuring that the UK is second-to-none amongst leading European and global economies in providing a competitive, business friendly tax environment for both global entrepreneurs and foreign direct investors; and (3) ensuring that the UK does not implement the BEPS outcomes on a more aggressive basis than its key global competitors, including the USA.
Where do your members stand on Brexit?
Our members were more divided than those of some other business organisations with a majority backing ‘Remain’ but 30% backing ‘Leave’. We decided, rightly in my view, not to come down on either side of the fence but to challenge the assertions made by both sides during the EU referendum. Since the referendum, our members have demonstrated how resilient UK businesses are and they have continued to expand, to recruit and, indeed, to increase the pay of their employees. We are continuing to ‘drill-down’ to the key issues and opportunities each sector faces but will not adopt a position on the right option the government should pursue in the negotiations and certainly will not do so before article 50 is filed. For the avoidance of any residual doubt, personally I voted Leave.
What’s your view on ‘making tax digital’ and HMRC resourcing?
We consider that it is imperative that HMRC vigorously pursues its MTD initiative and, indeed, some of the opposition to it appears to be somewhat ‘Luddite’ in the criticisms. Nevertheless, we agree that micro-businesses ought to be brought into MTD on a generous timescale with minimal, if any, penalties during the roll out. In addition, HMRC will need to have due regard to those individuals who will always struggle with digital platforms.
We do not consider that HMRC’s workforce ought to be increased. We have not seen any reliable evidence that HMRC is under-resourced. Some countries, such as the USA, appear to employ far fewer people pro rata to the size of their economies. The politicians should assist HMRC’s resources by simplifying and, indeed, repealing some taxes. No chancellor has really tried this since Nigel Lawson.
If you could make one change to UK tax law or practice, what would it be?
Whilst I fully support (as does the IoD) the legislation and initiatives introduced by recent governments to curtail tax abuse and aggressive avoidance, it should be understood that both businesses and individual taxpayers ought to be allowed, indeed encouraged, to mitigate their tax liabilities through authentic tax planning. HMRC should be instructed to prepare a guidance note on this with a list of what they will not regard as tax avoidance.
Comment on a recent market trend.
Whilst understandably more column inches in tax technical publications on BEPS in the last year, I think the much larger tax issue facing the powers-that-be is the move to a more flexible economy as the traditional division between employment and self-employment becomes increasingly less relevant. The UK must ensure that we embrace the flexible economy, and design and implement a tax system that will assist its growth, not restrain it.
