Tax focus in boardroom intensifies

A poll of 48 FTSE tax and accounting executives by PricewaterhouseCoopers found that one in every five UK businesses was now placing tax and how it was accounted for on the agenda of every single audit committee meeting. Nearly half of the respondents (46%) discussed these issues at every other meeting.

‘A shift in tax people from planning to reporting is inevitable, given the rise in importance of tax on the boardroom agenda,’ said PwC tax director Andrew Wiggins.

The poll also revealed that companies were recruiting aggressively to bring in expertise for tax accounting, with 42% of the respondents saying that they had specifically brought in people to manage the process.

More than 70% of those polled said tax reporting responsibility has increased for their teams in the last three years. The results of the poll will be particularly pleasing to HM Revenue & Customs, especially acting chairman Dave Hartnett, who has campaigned doggedly for better tax compliance from large businesses.

Hartnett has successfully directed the debate on big business tax compliance into the realm of corporate social responsibility.

This strategy has forced companies to pay closer attention to how they manage their tax affairs and made business reluctant to indulge in heady tax avoidance for fear of reputational damage.

Another reason for the increased focus on tax compliance could be the promise of less attention from the taxman as a quid-pro-quo. As part of HMRC’s review of its links with large business, the department has adopted a risk-based approach to tax compliance and promised companies that act transparently fewer and less onerous tax inspections.

Hartnett has recently emailed every FTSE 100 finance director laying out the new strategy; offering a lighter scrutiny of their taxes if they agree to higher levels of disclosure and co-operation.

‘For those that work with us providing a high level of disclosure and transparency we can offer earlier certainty, helping you maintain a predictable, sustainable tax charge and reducing risks affecting your reputation,’ the correspondence said.