No surrender in the battle over avoidance?
It was with some surprise that we came across the statement made by an undisclosed speaker at a KPMG event
In front of tax professionals, academics and government officials, the
speaker announced there was little risk of reputational damage from being
involved in avoidance.
The minutes do not indicate if anyone disagreed, though it is said some did.
The fact that some senior professionals thought so is interesting, however. In
an environment in which the government has made tax avoidance a dirty word, and
where HMRC chief enforcer Dave Hartnett has made it clear he wants to eradicate
the practice, it seems strange to make such an unguarded statement.
What does this mean? The speaker went on to claim that in fact an involvement
in avoidance could well improve the reputation of managers because they would be
seen as cutting costs and enhancing shareholder value. If that is the case, then
there is every reason for executives to go on paying large fees to advisers to
come up with innovative schemes to reduce their liabilities. The government
faces an unending struggle to stop them.
It is likely that HMRC and Treasury officials departed with their prejudices
confirmed. The message they took back was probably that companies believe they
can engage in avoidance with impunity, their identification of avoidance as an
illegitimate activity fortified. Indeed their resolve to continue the crackdown
may have been strengthened.
The upshot then could be a determination in both groups to continue as they
are with no real end in sight to the conflict. A situation not well disposed to
creating certainty and stability for either party.