FDs targeted as war on avoidance gets personal
Battle to close tax loopholes hots up as the Inland Revenue puts finance directors in the firing line.
Finance directors have become the main target for the Inland Revenue, as it vowed this week to put them in the witness box to explain their use of ‘aggressive’ tax avoidance schemes.
Link: Tax avoidance drive may falter if Brown goes
Chancellor Gordon Brown and the Revenue’s top avoidance fighter, Chris Tailby, sees finance directors as fair game. ‘We will be aggressive,’ said Tailby, head of HM Revenue & Customs’ new anti-avoidance group.
He added that the Revenue’s intention was to haul FDs before special commissioners if the department could not reach agreement over tax planning schemes. FDs would then face questioning by QCs.
‘If finance directors are involved in these schemes then we will make sure that they will have to explain and give evidence.’
Accountancy Age can reveal the Revenue will also report companies and accountancy firms to their relevant bodies when it feels tax avoidance has been aggressively pursued.
‘If we find evidence that we have been misled, or understand that a firm has acted (unethically) then we will report that firm to the institute concerned,’ said Tailby.
‘This isn’t just the Revenue. This is coming down from the chancellor through the Treasury. This is for real.’
As well as targeting finance directors, and reporting firms to their institutes, the Revenue has also been working with the Financial Reporting Council as part of moves to incorporate anti-tax avoidance in corporate governance measures.
‘We are talking to the accounting bodies in terms of accounting standards and we have certainly been talking to the FRC,’ said Tailby.
The Revenue intends to model its approach on the zero-tolerance strategy used by US regulators. ‘A lot of it is coming from the States – the PCAOB has done a lot of work on this,’ said Tailby.
Resources & Whitepapers
Accounting Software The power of customisation in accounting systems
A spokesman for the CBI said it was important to clarify the difference between avoidance and evasion and it was up to the Treasury to frame the rules correctly. ‘As a company you have a duty to your shareholders to ensure your tax is handled in the most efficient way possible,’ he added.
