Commenting on the launch of three parliamentary reviews into the tax system, CIOT Tax Policy Director John Cullinane said:
“We welcome these three inquiries into aspects of Britain’s tax system. They are an opportunity for HMRC, the Government – and other stakeholders such as professional bodies – to take stock and renew their efforts to work towards a more efficient and less complex tax system in which the public can have greater understanding and confidence.”
The three reviews will be carried out by MPs on the Treasury Committee; they will look at VAT in relation to Tax Gap, Brexit, Business and Good Tax Policy; how well HMRC is dealing with tax avoidance and evasion; and The Conduct of Tax Enquiries and the Resolution of Tax Disputes.
The CIOT believes that the more straightforward the tax system the less opportunities there are for aggressive and abusive tax avoidance schemes; and the less need there is for costly HMRC intervention. There is much work to be done by the Government and politicians in simplifying and streamlining the system.1
The CIOT and other professional bodies recognise that they also have a responsibility to help support the integrity of the tax system. Seven professional bodies work together to maintain and update Professional Conduct in Relation to Taxation (PCRT), which seeks to govern the conduct of tax professionals in the context of the ‘tripartite relationship’ between the tax adviser, their client or employer, and HMRC.2
John Cullinane said:
“We believe the PCRT Standards for Tax Planning make it clear to any of the small minority of tax professionals who are tempted to facilitate and promote tax avoidance schemes that this behaviour is not acceptable. The Government has supported the professional bodies in updating PCRT, with HMRC acknowledging that the guidance sets out an acceptable basis for dealings between members of the bodies and HMRC.”
John Cullinane added:
“We hope the reviews that have just been announced lead on to more effective and routine post-legislative review of whether tax measures are achieving their objectives at an acceptable cost. The Treasury Committee is suited to such a role and should hold government to account for its announcements on tax, some of which are announced at Budgets without any or very little prior public consultation.
“The CIOT has long argued that HMRC need to put more effort into investigating and prosecuting those who seek to evade tax. MPs would be right to call for extra resources in this direction, as well as tackling artificial and abusive attempts to avoid tax.”
Notes for editors
- Published by the Chartered Institute of Taxation (CIOT), Institute for Fiscal Studies (IFS) and Institute for Government (IfG), the Better Budgets report outlines ten steps toward making better tax policy, see link here.
- The Professional Conduct in Relation to Taxation (PCRT) sets out the high ethical standards which form the core of the ‘tripartite relationship’ between tax adviser, client and HMRC. It was last strengthened in late 2016 by the leading UK accountancy and tax bodies, including the CIOT.
In that update, the professional bodies strengthened the pre-existing five fundamental principles by the addition of five new Standards for Tax Planning that members must observe. These included a standard which makes clear that members “must not create, encourage or promote tax planning arrangements or structures that (i) set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation, and/or (ii) are highly artificial or highly contrived and seek to exploit shortcomings within the relevant legislation.” Such behaviours would lay a member of one of the bodies open to disciplinary action.
This addition to the PCRT responded to the Government’s challenge to the professional bodies, made in March 2015, to take a greater lead in setting and enforcing clear professional standards around the facilitation and promotion of tax avoidance. The professional bodies that work on PCRT are: Chartered Institute of Taxation, the Association of Taxation Technicians, the Association of Accounting Technicians, the Association of Chartered Certified Accountants, the Institute of Chartered Accountants in England and Wales, the Institute of Chartered Accountants of Scotland and the Society of Trust and Estate Practitioners.