CIOT president rejects ‘conflict of interest’ claim and says large firms have ‘a genuine interest’ in producing effective tax law’
A leading tax body has dismissed Margaret Hodge’s suggestion that secondees to HMRC and HM Treasury gain special ‘inside knowledge’ enabling them to exploit tax law.
Hodge, chairman of the Commons public accounts committee (PAC), claimed there was a ‘ridiculous conflict of interest’ when large accountancy firms second staff to advise on formulating new tax legislation.
Earlier today the Treasury said it was ‘totally absurd’ to suggest that the government ‘should not work with business and indeed anyone affected by its policies’, and Jim Harra, director-general of business tax at HMRC, defended the arrangements in an interview with the BBC.
Consultations
Last year the government held more than 30 technical consultations on proposed changes to tax law, and the recent Budget report indicated that it intends to launch a similar number this year. The annual Finance Bill is published in draft three months ahead of the Budget.
Peter Fanning, chief executive of the Chartered Institute of Taxation (CIOT), noted that the PAC report recognised the importance of tax advisers to the smooth operation of the tax system.
‘Tax agents save the government money both by helping their clients get their tax bills right and by taking on tasks that would otherwise fall to HMRC,’ he said today.
‘Tax law is best developed in open consultation, to which all can contribute. The Treasury and HMRC need to engage with all those interested in the tax system to get the best law for the country. MPs need to make sure they are getting expert advice when they consider and pass our tax laws.’
Fanning said: ‘Every year CIOT members donate tens of thousands of hours of their time to helping HMRC improve the tax system not only for large businesses, but also for small business, families and individuals, including those on lower incomes.
‘Secondments to and from HMRC, provided [they are] done openly and transparently, are completely appropriate. Our view is that HMRC and the taxpaying public gain significantly from such arrangements. The contention that secondees gain some special “inside knowledge” which enables them to exploit tax law inappropriately is misguided. Tax law is open and available to everybody, as is HMRC’s guidance.
‘When large accountancy firms devote resources to helping HMRC write tax law it’s not out of self-interest. It’s because they have a genuine interest in producing effective tax law.’
He added: ‘When it comes to the process of making good tax law, that accurately and effectively delivers the government’s objectives, tax advisers are part of the solution.’
Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales (ICAEW), said: ‘Chartered Accountants are essential to helping make the tax system work and ensuring that the right amount of tax is collected. How they do this is underpinned by guidance that sets out clearly their ethical and professional obligations.
‘As the public accounts committee has recognised, the UK tax system is incredibly complex and has struggled to keep up with the increasingly global nature of commerce. Simplifying and updating it will require international leadership, co-operation and agreement through organisations such as the OECD and G8.
‘The accountancy profession also has a critical contribution to make in helping improve and strengthen the tax systems and is just as vital as a well written tax code and HMRC.
‘We will continue to ensure ICAEW chartered accountants are aware of their obligations when it comes to the provision of tax advice. This includes updating our guidance for members to reflect the latest measures designed to reduce aggressive tax avoidance including the introduction of the GAAR later this year.’
Gareth Hills, president of the Association of Revenue and Customs (ARC) representing senior HMRC officials, said: ‘ARC has seen no evidence to support PAC’s view that there is anything inappropriate about secondments to HMRC or the Treasury. I’m afraid this report is another example of PAC missing the point about the challenges facing HMRC and how ARC members are responding.’
CIOT president rejects ‘conflict of interest’ claim and says large firms have ‘a genuine interest’ in producing effective tax law’
A leading tax body has dismissed Margaret Hodge’s suggestion that secondees to HMRC and HM Treasury gain special ‘inside knowledge’ enabling them to exploit tax law.
Hodge, chairman of the Commons public accounts committee (PAC), claimed there was a ‘ridiculous conflict of interest’ when large accountancy firms second staff to advise on formulating new tax legislation.
Earlier today the Treasury said it was ‘totally absurd’ to suggest that the government ‘should not work with business and indeed anyone affected by its policies’, and Jim Harra, director-general of business tax at HMRC, defended the arrangements in an interview with the BBC.
Consultations
Last year the government held more than 30 technical consultations on proposed changes to tax law, and the recent Budget report indicated that it intends to launch a similar number this year. The annual Finance Bill is published in draft three months ahead of the Budget.
Peter Fanning, chief executive of the Chartered Institute of Taxation (CIOT), noted that the PAC report recognised the importance of tax advisers to the smooth operation of the tax system.
‘Tax agents save the government money both by helping their clients get their tax bills right and by taking on tasks that would otherwise fall to HMRC,’ he said today.
‘Tax law is best developed in open consultation, to which all can contribute. The Treasury and HMRC need to engage with all those interested in the tax system to get the best law for the country. MPs need to make sure they are getting expert advice when they consider and pass our tax laws.’
Fanning said: ‘Every year CIOT members donate tens of thousands of hours of their time to helping HMRC improve the tax system not only for large businesses, but also for small business, families and individuals, including those on lower incomes.
‘Secondments to and from HMRC, provided [they are] done openly and transparently, are completely appropriate. Our view is that HMRC and the taxpaying public gain significantly from such arrangements. The contention that secondees gain some special “inside knowledge” which enables them to exploit tax law inappropriately is misguided. Tax law is open and available to everybody, as is HMRC’s guidance.
‘When large accountancy firms devote resources to helping HMRC write tax law it’s not out of self-interest. It’s because they have a genuine interest in producing effective tax law.’
He added: ‘When it comes to the process of making good tax law, that accurately and effectively delivers the government’s objectives, tax advisers are part of the solution.’
Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales (ICAEW), said: ‘Chartered Accountants are essential to helping make the tax system work and ensuring that the right amount of tax is collected. How they do this is underpinned by guidance that sets out clearly their ethical and professional obligations.
‘As the public accounts committee has recognised, the UK tax system is incredibly complex and has struggled to keep up with the increasingly global nature of commerce. Simplifying and updating it will require international leadership, co-operation and agreement through organisations such as the OECD and G8.
‘The accountancy profession also has a critical contribution to make in helping improve and strengthen the tax systems and is just as vital as a well written tax code and HMRC.
‘We will continue to ensure ICAEW chartered accountants are aware of their obligations when it comes to the provision of tax advice. This includes updating our guidance for members to reflect the latest measures designed to reduce aggressive tax avoidance including the introduction of the GAAR later this year.’
Gareth Hills, president of the Association of Revenue and Customs (ARC) representing senior HMRC officials, said: ‘ARC has seen no evidence to support PAC’s view that there is anything inappropriate about secondments to HMRC or the Treasury. I’m afraid this report is another example of PAC missing the point about the challenges facing HMRC and how ARC members are responding.’
