TaxCorporate TaxTax focus in boardroom intensifies

Tax focus in boardroom intensifies

The focus on how tax is accounted for at large listed companies has reached unprecedented levels of intensity as plcs grow increasingly concerned with the impact tax can have on businesses’ reputation

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.

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