The measure, or Clause 92, was greeted with horror because it directly
mirrored steps taken in the US as part of the Sarbanes-Oxley Act – the vast
tranche of legislation that came in after the Enron and WorldCom corporate
Sarbox, as it became known, damaged US markets significantly. In effect, the
costs of compliance were huge making, in turn, the cost of capital
insupportable. Many companies delisted or chose not to list in the US as a
Would the same thing happen here because of Clause 92? Certainly the rule has
a different motivation. This is about beating tax avoidance, rather than
widespread corporate skulduggery. The problems come in providing assurance that
the accounting for tax is right. A snapshot poll from Deloitte of the FTSE100
reveals that some FDs believe Clause 92 could add up to £250,000 to the fees for
assurance. This is not in the same order as Sarbox, which added millions to the
audit costs of very large listed companies, but it is significant.
Perhaps more significantly, because it places a personal liability on FDs, it
brings them back to focusing their efforts on compliance just when they believe
they should be helping run the business. Once again they are caught on a seesaw
with rules on one end and business strategy on the other.
There has been little consultation on this measure and no evidence released
demonstrating that it will add to the overall sum of UK tax compliance. And yet
it looks like FDs will have to live with it nonetheless.
Does Darwin's theory apply to taxation? Colin ponders...
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The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
UK-based non-doms have paid ten times more tax than the average taxpayer, raising concerns over the Brexit impact on non-dom contributions and therefore, the economy