Taxing questions for the year ahead

John Cullinane has been president of the Chartered Institute of Taxation for
a month. Until now, it has mostly been a question of dinners, speeches and
drinks receptions. Now it’s time to get down to business.

There won’t be a revolution at the institute, however, which has a strategy
decided until 2010. ‘You’re not meant to go off on a frolic on your own, but
rather to drive the strategy forward,’ admits Cullinane.

There are two main themes he intends to focus on: raising awareness of the
profession and insisting on the importance of the rule of law.

As far as raising awareness is concerned, he thinks the public either don’t
know about advisers or have a negative perception. ‘Most businesses have a tax
adviser they are quite close to and some understanding of what they do. More
broadly, there’s also the rather negative propaganda that it’s all about tax
avoidance and there are attempts to positively confuse avoidance with evasion,’
he says.

‘The CIoT wants to push the idea that tax advisers are trying to help people
achieve usually business and sometimes personal objectives.’

Tax simplification is one topic the institute will be talking about. ‘Several
years ago we had members saying “why are we doing that, we will put ourselves
out of jobs”. Nobody ever says that now,’ says Cullinane.

He is not necessarily a fan of the Tax Law Rewrite project, the initiative to
painstakingly go through tax law to update it. ‘Legal terms of art are being
spelled out sentence by sentence, but the substance is as complicated as it ever
was.’ Moreover, he thinks that government has ‘no appetite’ for simplification,
paying only lip service to the idea.

‘More and more commercial people are beginning to list tax as one of the real
negatives about doing business here. Not particularly the level, but the
complexity and the uncertainty.’

The government’s pledge to make tax avoidance ‘not worthwhile’ and litigate
on each case poses a problem for Cullinane: ‘If it goes to court, the government
might get nothing. What is it going to do where the law is a 50/50 bet?’

And where is the avoidance debate going? Some suggest HM Revenue &
Customs has forced mainstream advisers out of the market, leaving only boutique
operations devising aggressive schemes.

It’s a view Cullinane has some sympathy with. ‘Five years ago, the perception
[with city bonus schemes] was that it was fair game because everybody did it.’
Not any more. HMRC may have trouble tracking down what the ‘boutiques’ are doing
too, as some may be taking an aggressive attitude to the disclosure rules.
‘There probably are some boutiques out there getting opinions from counsel
saying this or that is not disclosable. The test is not very clear, and requires
a lot of judgment. If people are determined not to disclose, they can probably
find some argument why not to.’

The ongoing impact of the European courts will be important, and Cullinane
wonders whether ‘the European court has changed its tune?’ Whereas previously
most of the group litigation orders went against the government and in favour of
companies, the M&S case seemed to suggest a greater sympathy for member
states on behalf of the judges.

Even so: ‘HMRC is not reacting in a sensible way,’ he says. ‘It is picking
what it can out of cases, which will lead to a loss of sympathy.’

External influences aside, Cullinane will also be looking at the internal
issue of CTA exams. The CIoT still has a traditional exam structure, and may go
for a modular approach. ‘It’s one of the options, and quite a strong one.’

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