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Ethical taxation - short version - do not publish

Ethical taxation - short version - do not publish


Ethical taxation increasingly features on the business agenda across all sectors, driven in part by the recent legislative focus on anti-tax avoidance measures and increasing public scrutiny, but also by a desire from within businesses to “do the right thing” on taxation matters.

There has been a raft of new anti-avoidance and tax compliance legislation within a relatively short period of time, including a range of new reporting regimes. HMRC is backing up this legislation with a marked increase in investigations, and we expect this trend to continue. There is only one direction of travel when it comes to ensuring businesses "pay their fair share”, especially given the large black hole in the public finances caused by the COVID crisis.  Businesses should make sure that they are up to date on the latest measures. 

The Budget 2020 also addressed environmental taxes, with headline-grabbing measures such as a new tax on plastic packaging from April 2022.  The UK Government committed in June 2019 to bring net UK carbon emissions down to "net zero" by 2050; by its own admission at the time, one of the most ambitious targets in the world.  The Government's stated strategy is to create "high-skill, high-wage, low-carbon jobs", and tax policy will play a key role in seeking to influence the momentous behavioural change required of both businesses and consumers to meet this ambition. All businesses will need to consider the impact of the significant and far-reaching fiscal changes expected in this area.

Legal and regulatory overview

The UK tax legislative framework now contains a significant number of anti-avoidance regimes. In addition to targeted anti-avoidance measures such as the new off payroll working rules (postponed until 2021) there are wide-ranging provisions including the GAAR (general anti-abuse rule), extensive disclosure regimes including DOTAS, FATCA/CRS and DAC 6, and other tax compliance measures such as the requirement for large companies to publish a Tax Strategy, the senior accounting officer rules, HMRC's co-operative compliance framework and the code of practice on taxation for banks.   And in 2017, the Government introduced a new corporate criminal offence of failing to prevent the facilitation of tax evasion.

On the horizon, in addition to the off-payroll working rules, the Government is also seeking to impose a requirement on large businesses to notify HMRC of any uncertain tax positions taken by the business, i.e. those which HMRC would be likely to challenge.  Tax professionals should also be aware of the current consultation looking at raising standards in the tax advice market.

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