A statement of principles that sets out steps UK businesses should take in order to improve the transparency and understanding of their tax affairs has been published by the Confederation of British Industry (CBI).
In the area of tax planning, the CBI recommends that British businesses operating in the UK should:
– only engage in reasonable tax planning that is aligned with commercial and economic activity and does not lead to an abusive result
– respond to tax incentives and exemptions, where appropriate
– interpret the relevant tax laws in a reasonable way consistent with a relationship of “co-operative compliance” with HMRC
– in international matters, follow the terms of the UK’s Double Taxation Treaties and relevant OECD guidelines in dealing with such issues as transfer pricing and establishing taxable presence, and should – engage constructively in international dialogue on the review of global tax rules and the need for any changes.
Regarding transparency and reporting, the CBI recommends that businesses should:
– be open and transparent with HMRC about their tax affairs and provide all relevant information that is necessary for HMRC to review possible tax risks
– work collaboratively with HMRC to achieve early agreement on disputed issues and certainty on a real-time basis, wherever possible
– seek to increase public understanding in the tax system in order to build public trust in that system.
The CBI’s director-general, John Cridland, said: “UK businesses make a huge tax contribution to the UK economy, paying £161 billion this year – almost a third of total tax receipts. But companies need to do a better job of explaining their tax affairs to the public. We are encouraging all companies to explain why they pay what they do in a straight-forward and accessible narrative, ideally on their website.”