The government is getting itself into a terrible mess about tax, largely because it has refused to take the advice of the accountancy profession.
The signs of crisis are everywhere. The Inland Revenue has twice rescheduled the implementation of the construction industry scheme, which is already causing chaos in the building industry. It is also becoming increasingly clear that the Revenue will not be able to cope with the proposed changes to taxation for personal services companies.
On the more fundamental issues, it seems that some Treasury and trade ministers still do not understand the business realities of a global economy.
For all their New Labour gloss, some very Old Labour ideas are still dear to the hearts of several members of the government. Many still seem to believe that taxation is a moral duty owed by companies to society. Most multinationals see tax as just another cost to be minimised in the interests of the business and its stakeholders. Even in cool Britannia it seems the ‘avoidance’ versus ‘sensible tax planning’ argument still has plenty of life left in it.
It need not be like this, of course. All the government has to do is undertake real consultation. Since 1997, accountants have been presented with a series of faits accomplis and asked what they think. Ministers would find their tax ideas far easier to implement if they asked for advice before making their minds up.
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