UK plc takes on Treasury in avoidance battle

PricewaterhouseCoopers is working with the body representing FTSE100 finance
directors in an apparent attempt to wrest the initiative from chancellor Gordon
Brown in the continuing battle over tax avoidance, Accountancy Age has learned.

In response to growing attacks from the chancellor on avoidance, as well as
perceptions that big corporates are being irresponsible in avoiding tax, the Big
Four firm is consulting the Hundred Group of FDs over new ways to disclose the
full tax burden on Britain’s biggest companies.

The move is designed to allow big corporates to lead the debate on tax
avoidance and head off criticism from lobby groups and the government that they
are abusing tax rules.

PwC recently released a substantial analysis of companies’ views of taxation
in an attempt to shift attitudes. It proposed changes to tax reporting that
would encompass what it called a ‘total tax contribution framework’.

Companies’ rates of corporation tax, which often appear well below the
headline rate of 30% when detailed in annual reports and company results, are
attracting increasing attention from critics of avoidance.

They pay far more in tax than that headline figure, however, a point that PwC
thinks companies should reflect. ‘The aim of this paper is to stimulate an
informed debate regarding the tax contribution made by companies. Our
proposition is that this contribution should be looked at from the point of view
of all the taxes to which a company is subject and not just corporate tax on its
profits,’ the firm said.

The firm’s work with the Hundred Group is understood to involve extending the
consultation on those proposals. The Hundred Group, though a loose association,
is

enormously influential, especially as its chairman, Jonathan Symonds of
AstraZeneca, co-chairs a business tax forum with Dave Hartnett, director-general
of HM Revenue & Customs.

The move came as tax advisers recently revealed they were becoming more
attracted to the idea of a general anti-avoidance rule, as an alternative to the
raft of legislation put through by the government.

The campaign group Tax Justice Network said it had detected a growing
appreciation among the Big Four of the moral implications of tax avoidance.
‘Taxation issues are fast becoming a crucial element of the corporate
responsibility agenda,’ its most recent newsletter said.

In March 2005, KPMG released Tax in the Boardroom, in which the firm argued
that tax had ‘changed dramatically’ in recent years. ‘Its public profile has
become much more conspicuous, it has acquired moral, ethical and social
dimensions that have never been discussed before,’ the firm said.

PwC played down its association with the Hundred Group, saying it was a means
for its consultation, and not any joint endeavour. Symonds could not be
contacted for comment.