Governments must address need to restore public trust in tax, adviser says

Governments considering how multinationals should be taxed must address the erosion of public trust in tax administrations, while businesses continue to stress the importance of certainty in tax matters, panellists told a conference hosted by the Women in Tax network at Pinsent Masons’s London office November 20. Alexandra Readhead, an international tax and extractive industries consultant, said multinationals should be taxed “in a way that creates resources for public trust.”

Lizzie Arnold, a senior policy adviser at HM Treasury, outlined the UK government’s perspective on the taxation of multinationals. She described three aims, the first of which is to create a competitive corporate tax system … Giorgia Maffini, senior tax economist at the OECD, noted that residence and source are the two principles that define how multinationals are taxed. “We are trying to understand whether it’s time to think of another principle,” she said … Corporations are looking for “a bedrock of certainty” to provide stability, said Anna Elphick, vice president of tax for Asia and Africa at Unilever. Read more:

My news story for Tax Analysts, November 22 (paywall)

UK government urged to implement public country-by-country reporting

The Paradise Papers revelations show that tax avoidance has become “a scourge on our society” and illustrate the need for public country-by-country reporting, Dame Margaret Hodge told members of the UK Parliament as she led an emergency debate November 14 while the government continued to defend its record of tackling avoidance and evasion.

Hodge, chair of an all-party parliamentary group on responsible tax, said the debate was urgent because Chancellor of the Exchequer Philip Hammond was putting the finishing touches on the budget statement, scheduled for November 22. “The actions and the culture of powerful, large corporations and of the wealthiest in our society, as revealed in the Paradise Papers, constitute a national and international disgrace,” Hodge said …

The Paradise Papers have exposed a crisis of confidence, Conservative MP Nigel Mills said. “We need our tax system to be fair and our financial system to be legally compliant and as clean as we can make it.” Read more:

My news story for Tax Analysts, November 15 ($)

House of Commons debate of November 14 on tax avoidance and evasion: transcript

Politics make significant UK tax rises unlikely, think tank says

Chancellor of the Exchequer Philip Hammond has been “dealt a very tricky hand” and faces a choice between maintaining his commitment to getting the UK’s public finances into a surplus by the mid-2020s and responding to pressure for increased public spending, according to the Institute for Fiscal Studies.

“It is hard to see how the chancellor can both maintain the credibility of his fiscal targets and respond effectively to the growing demands for spending,” the IFS said in an October 30 release. Hammond will present his autumn budget on November 22, setting out the government’s plans for the economy, which will be based on updated forecasts from the independent Office for Budget Responsibility.

My news story for Tax Analysts, October 31 ($)

UK campaign group urges greater international cooperation on corporate taxes

While the UK government continued to defend reductions in the corporate tax rate, a new campaign group called on ministers to champion the role of tax in building a civilised and fair society and to stop trying to compete for investment through “tax cuts and giveaways.”

Tax Justice UK aims to fill a “void in the debate around tax” in the UK. The November 22 budget should include steps toward “taxing the new economy” and resourcing and refocusing HM Revenue & Customs, it said in an October 25 release. The group was launched in May as a sister organisation to the Tax Justice Network but is independent of it, according to its website. Read more:

My news story for Tax Analysts, October 26 (paywall)

OECD recommends UK tax reform amid Brexit uncertainty

Uncertainties created by preparations for Brexit in 2019 will continue to weigh on the outlook of the UK economy until those uncertainties are resolved, said OECD Secretary-General Angel Gurría while presenting the think tank’s annual U.K. survey, which recommends increasing taxes on the self-employed.

The UK economy has weakened in the aftermath of the June 2016 vote to leave the European Union, the OECD noted, adding that the June 2017 general election led to a hung Parliament and further uncertainty. “In case Brexit gets reversed by political decision (change of majority, new referendum, etc.), the positive impact on growth would be significant,” states the OECD’s 2017 economic survey of the United Kingdom.

The government dismissed any suggestion of a second Brexit vote, however. “We are leaving the EU, and there will not be a second referendum,” a spokesperson said in an emailed statement, adding that the government is “working to achieve the best deal with the EU that protects jobs and the economy.” Read more:

My news story for Tax Analysts, October 18 (paywall)

UK chancellor urged to improve tax consultation and support investment

Tax professionals and business groups have called on the UK government to improve the tax policy consultation process and take steps to support business investment, as Chancellor of the Exchequer Philip Hammond prepares to deliver the autumn budget on November 22.

The Chartered Institute of Taxation said its message on consultations was simple — that the government should “consult fully before making changes to the tax system, observing closely” the tax consultation framework published in March 2011.

“Too many consultations begin when key decisions have already been made, shutting off potential better options to achieve the same goal,” the CIOT said. Read more:

My news story for Tax Analysts, October 10 (paywall)