Avoidance will not damage reputation

Avoidance will not damage reputation

Tax avoidance does not damage corporate reputations and may even enhance them, minutes of a symposium held by KPMG suggest

According to KPMG’s document, the use of tax avoidance schemes, such as those
employed by Debenhams and other retailers to divert a percentage of all
purchases to card handling subsidiaries, do not appear to damage the profile of
corporates.

The remarks come at a time of unprecedented attention on tax avoidance. Dave
Hartnett, director general of HM Revenue & Customs, distanced himself from
the comments this week, saying: ‘Involvement with tax avoidance increasingly
poses reputational risk for business, which is why so many are now putting tax
on their boardroom agendas.’

The minutes recorded a suggestion made by participants at the KPMG meeting,
which included representatives of the firm, academics, multi-nationals and
officials from the Treasury and HMRC.

The minutes read: ‘It was suggested… that there was little risk to reputation
from tax avoidance; the example was given of the treatment of VAT on retail
credit card sales, where there appears to have been little, if any, public
criticism of the retailers involved. Indeed, such arrangements might even be
seen as enhancing the reputation of management for reducing the tax burden in
pursuit of their fiduciary duty to shareholders.’

The discussion, which took place earlier this year, continued: ‘It was also
suggested that debating tax avoidance on the level of morality rather than
legality may run the risk of encouraging avoidance amongst those who disagree
with the way that taxes are spent.’

The suggestion that companies can aggressively pursue avoidance schemes with
little fallout could encourage some to re-enter the market. Schemes have proved
unpopular recently as the authorities have pursued a clampdown.

A spokeswoman for KPMG said the comments were not its view.

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