Tax conference - Good relations key to CTSA

Tax managers in business were warned they need to build up good relations with their tax inspectors to survive the rocky transition to corporation tax self-assessment.

Steve Witts, tax manager for recruitment and distribution giant Hays, said the introduction of the new system would reduce interaction between companies and their tax inspectors.

The process of settling tax liabilities, involving meetings, phone calls and correspondence between tax managers and inspectors, will change under CTSA.

Companies will have greater responsibility for computing their own tax liabilities, but will be exposed to random audits and investigations by the Inland Revenue.

The system applies to all accounting periods ending after 30 June 1999.

Witt said tax managers should ensure that some sort of rapport with their inspectors developed as the system changed. As an ex-tax inspector, he admitted this was like asking the fox to check the security of the henhouse, but said companies had a lot to gain and nothing to lose.

‘I am not suggesting corporates become distant outposts of the Revenue.’ But he added: ‘Developing a relationship will make your inspector less likely to see normal transactions as ‘fancy footwork’.

Witts said tax inspectors also had to change their attitude to deal with the changes.

He called for an end to the system under which they were judged on how much they adjusted taxable profits.

He also said inspectors should take a realistic attitude to the logistical realities faced by large companies in collecting information.

Tax managers of large corporates attending the conference echoed the call for Revenue realism.