Marjorie Williams, head of the Inland Revenue’s newly created large business office, denied last week that corporate self-assessment will give her greater power to tackle aggressive tax planning.
She also denies that the spend-to-save initiative has put pressure on her teams to crack down on sectors that traditionally pay little tax, such as foreign national companies.
Instead, in an interview with Accountancy Age, she said there would be no revolution in the way the Revenue approaches big business. The large business office, she claims, has adopted a ‘twin-track’ approach. It is as much about ‘customer service’ as the need to maximise the tax take from big business.
But the top 5% of companies that fall under her watchful eye have grown increasingly nervous. Over the last year, FTSE-100 companies and other large corporations have had their collars felt for the first time.
It has been little over a year since the Revenue’s 15 large business offices were brought under one umbrella organisation. Put in charge, Williams, a career civil servant, became one of the most senior women in the organisation.
She is entrusted with bringing in between #20bn to #25bn in tax with an extra #1.6bn to #2bn in additional adjustments each year.
Williams acknowledges that ministers expect increased taxes to flow from large companies once the co-ordination plans at the Revenue are complete.
‘There is no denying that we received spend-to-save resources, and if you put more people in the top end of a business, you tend to find more tax.’
She is keen, however, to stress the lack of aggression needed on the part of her colleagues to pull off the plan.
‘One reason I think people are concerned, unnecessarily, about large business offices is that corporate self-assessment is on its way. They are worried we may be going for a more investigatory approach. It’s true there are greater reporting requirements and we can ask for information in a more straightforward way, but it won’t make a fundamental difference.
Our people don’t have yield targets and they don’t get any kind of steer from me on how much tax to collect.’
But finance directors continue to be wary. Until now, the Revenue has raised technical queries, but in general, tax experts report that inspectors have accepted the calculations behind figures quoted in company annual reports.
Williams says those days are over. Part of her drive to improve customer service has been the introduction of industry teams. The teams’ inspectors are currently being trained to understand the reporting of their designated industry in more detail.
Williams said the idea was not just to arm officers when they question expense claims. ‘It is more fundamental than that. We want to understand the business to better understand the computations in the annual report.’
The idea is that inspectors will question the basis of the company’s reporting scheme, rather than simply calculating tax based on figures put in front of them.
She says the move was as much for the benefit of the Revenue’s ‘customers’, which will find their regular tax inspector able to hold a conversation about issues peculiar to their industry.
The next stage is real-time audits. These will allow tax managers to gain Revenue approval for their schemes on a pay-as-you-go basis. Again, Williams is suggesting that the idea will benefit customers by freeing finance department staff for other duties.
Hordes of trained accountants were due to join the Revenue to give the current crop of inspectors greater insight into the world of auditing.
The booming economy has driven up salaries, however, and the take-home pay of a civil servant looks less attractive than a couple of years ago.
Williams denies that she ever wanted to draft in huge numbers of qualified staff. ‘We have increased the number of accountants slightly, and we have taken them on one or two-year contracts so they have recent business experience.
But we have excellent staff here and we are training them at the moment to deal with people in the outside world.’
When asked what she would like to say to her customers, her reply is double-edged: ‘I am impressed by many of the tax managers I meet and their willingness to see the changes, and how realistic they are about the need to comply.’
The customer survey that Williams is planning should make interesting reading.
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