Recently I had the pleasure of speaking at the launch of the Responsible Tax Lab, the brainchild of CoVi, building on their valuable work of the last two years in this area.
I was asked to choose a word that I wanted to anchor my speech around. And I chose ‘Reassurance’.
There has never been a better time to have an open dialogue around the purpose and effect of tax than now. The position taken by CoVi has been refreshingly balanced and this has facilitated contributions from almost all tax stakeholders. This even extends to people like me, the tax professional. Often maligned, sometimes deservedly so. But critical to the building of a better tax world.
Reassurance is vital to society. More people than ever take a keen interest in tax, and generally in my experience for genuine reason. People at large want to see that those who live work and enjoy ‘our’ society pay towards the maintenance and development of that society. Tax is the price to be paid for the right to enjoy the freedoms and opportunities our society affords us.
And the need for reassurance extends to taxpayers too. The overwhelming majority want to abide by the rules. Increasingly very many, often larger, corporates actively seek reassurance that their tax affairs are in order. Some have considered the ‘Fair Tax Mark’ approach but that hasn’t proven universally popular. Others seek a regime of binding publicly open advance rulings from the tax authorities in respect of specific projects, modelled on the Australian Tax Office model. And in this, comes the role of the tax authority and policy makers.
Taxpayers need to see that what they believe they can rely on, can in fact be relied on and not played around with the benefit of hindsight.
And this takes us to group of tax stakeholders missing from the work of the Responsible Tax Lab – HM Revenue & Customs, HM Treasury, and politicians. I have sympathy with HMRC on many matters. One relates to the fact that they have to administer a tax regime which is not wholly of their own making. Instigated by Parliament (rightly so, given its responsibility to society), drafted by Treasury. All the time not taking wholesale simplification seriously (despite the obvious efforts of the Office of Tax Simplification) they often muddle along not contributing to what good might look like. And too often they have to work with the effect of the latest response to an adverse ‘red top’ newspaper headline on tax – never a sound basis for tax policy. And all of this adds to the impressive complexity of the UK’s tax regime; one rooted in the 19th century. An analogue tax code in a digital world.
But words alone won’t change matters. CoVi and the participants of the Responsible Tax Lab have a generational opportunity to co-create a different tax world. And all stakeholders must collaborate and contribute to their work.