TaxCorporate TaxTesco vs The Guardian: treading a fine line

Tesco vs The Guardian: treading a fine line

Tax avoidance is not illegal

Gavin Hinks, AccountancyAge

And yet Tesco’s libel writ against The Guardian for its allegations
that the supermarket giant has avoided vast sums in corporation tax indicates
that avoidance is now considered so unacceptable, companies cannot tolerate
being accused of it.

HM Revenue & Customs has worked hard to get to this position and those
who have campaigned against avoidance might consider the impending court room
battle between The Guardian and Tesco a job well done.

Since the introduction of the tax avoidance disclosure regime, the line
between avoidance and evasion has been blurred leaving tax experts and finance
directors vague on where they might find solid ground.

Even Budgets now regularly include measures to close down specific schemes.
In the last one, government relied upon the closure of schemes to add a £1bn to
its coffers over the next three years. Attacking avoidance therefore pays.

And yet it remains the duty of company directors to manage their tax affairs
in the most efficient way. It is in shareholders’ interests that the tax
liabilities are controlled. Where this may leave us once again is seeking
guidance at worst, definitions at best, on what is, or what is not, an
illegitimate avoidance scheme.

Many tax experts will tell you that HMRC has deliberately avoided the offer
of clarity ­ why would they? It doesn’t really suit the revenue-raising agenda.
There must be legitimate tax management on the one hand, and artificiality on
the other.

The experts need clarity over where these boundaries lie. While Tesco and
The Guardian head toward a court showdown, it would be wise if HMRC saw
how the battle highlights its own responsibilities.

comment@accountancyage.com

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