Tax professionals need to engage in debate on the non-expert's terms rather than retreating into ‘you wouldn’t understand’, says former HMRC official
ActionAid has changed the wording of the introduction to an allegation, made on its website, that Associated British Foods ‘has used a range of loopholes to avoid paying taxes, shifting profits into tax havens and getting huge tax breaks’. That allegation, made in relation to a Zambian subsidiary, has been flatly denied by ABF. ‘We are not siphoning off profits from Zambia,’ the group’s tax director told Tax Journal last week.
ActionAid continues to claim on its website that ABF has been paying ‘virtually no corporation tax’ in Zambia.
‘This has cost Zambia an estimated US$27m since 2007,’ the charity said until yesterday. The sentence now reads: ‘A combination of tax haven schemes and special tax breaks has cost Zambia an estimated US$27m since 2007.’
Chris Jordan, tax justice campaign manager at ActionAid, told his predecessor Martin Hearson that he thought Hearson’s view – that ‘the headline web copy over-simplified the issue’ – was ‘reasonable’.
Hearson, who has hosted a lively discussion of the controversy surrounding ActionAid’s allegations, wrote on Wednesday: ‘ActionAid shouldn’t have gone out with [virtually] “zero tax paid” as its top line. It didn’t need to. It could have led on the $27m figure instead.’
There was a particular problem, he said, with the statement that ‘this has cost Zambia an estimated $27m’. He added: ‘The reason ABF paid [virtually] zero taxes from 2007-12 was mostly, if not entirely, because of capital allowances, not the practices criticised by ActionAid.’
As Tax Journal reported on Wednesday, a spokesman for ABF said ActionAid’s report, together with its press release, ‘downplays the importance of the capital allowances, and smears ABF as a result’.
But Hearson stressed that in his view the problem was ‘about the top line messaging, not the validity of the analysis underlying the report, which does acknowledge the capital allowances upfront’.
Hearson has also suggested that some of ABF’s statements have been ‘misleading’, and that the way in which companies respond to allegations is ‘rarely whiter than white’.
Visitors to the ActionAid website are still invited to ‘tell [ABF] to stop tax dodging in Zambia’ and ‘pay a fair share in Zambia’.
Being objective
Responding to suggestions that tax campaigners would benefit from ‘unbiased’ technical reviews of tax research prior to publication, Jordan told Tax Journal that the report on ABF had been independently reviewed at two stages by a former HMRC transfer pricing official. The second review was carried out after the charity engaged in ‘full right-to-reply’ correspondence with the company.
Mike Truman, editor of Taxation, told Tax Journal on Wednesday: ‘Tax advisers should perhaps offer to lend more support to campaigners, in the form of proper, unbiased and independent advice. Groups would need to trust our professionalism in being objective.’
Truman has been criticised for his recent decision to declare that Margaret Hodge, chairman of the Commons public accounts committee, was his ‘Tax Prat of the Year’. Some experts told Tax Journal that the ‘award’ was not a helpful contribution to what is already a largely polarised debate.
Despite Hodge’s combative style, and her adoption of what one barrister has described as ‘far too broad a conception of avoidance’, she is widely regarded as having been instrumental in bringing tax avoidance, and the need to modernise the international tax system, to the centre of political debate.
Responding to Truman’s suggestion, Hearson tweeted on Wednesday: ‘Do you think “Tax Prat” will have helped campaigners "to trust your professionalism in being objective"?’
‘You wouldn’t understand’
This week’s issue of Taxation features a satirical ‘guide’ for tax professionals on ‘how to handle a tax prat’. Wendy Bradley, a former member of HMRC’s ‘better regulation’ team who is now a PhD student researching the relationship between tax simplification and better regulation, wrote:
‘We are all tax professionals here, right? We get it. We understand. There is a continuum that goes from tax planning via tax avoidance to tax evasion, and we are always on the right side of it.’
However she added: ‘I am sure we have all had that uncomfortable feeling of trying to talk to someone who doesn’t speak our language. Perhaps you have come up against one of those people who thinks that country-by-country reporting is a good idea? What about someone who wants company tax computations or personal tax returns to be published? There are people who do not know that “there is no equity in tax” and think that there ought to be some kind of principle of fairness involved in taxation – imagine that!’
Bradley’s guide to ‘countering opponents’ suggested that readers should ‘control what your audience sees, attack the person – not the argument, argue against straw men, and deflect attention away from the specific criticism’.
‘Sometimes … you [will] find yourself in the middle of an actual conversation about tax avoidance,’ she wrote.
‘Well, worse things happen at sea, and in most cases you can get by with a few handy responses. Try one of these: “I think, with respect, you are underestimating the skills and quality of HMRC; If you collected VAT from a customer and did not hand it on, it would be a criminal offence; Evasion is illegal and tax avoidance is not; Delaware is not a tax haven; It is a supply chain management issue”.’
Bradley told Tax Journal today: ‘I think the interesting question is “who are the stakeholders in the tax conversation?” Responses to the PAC hearing [in which MPs questioned heads of tax at the big four accountancy firms on 31 January] were framed as if only people who "spoke tax" had any place talking about tax at all.’
She added: ‘But actually tax affects all of us, and we have a right as citizens to engage in the debate, even if we don't understand that "there is no equity in tax" and don’t know by what definition Delaware is not a tax haven. Tax professionals need to engage with that debate on the non-tax-expert's terms rather than retreating into the bunker of "you wouldn't understand”.’
Tax professionals need to engage in debate on the non-expert's terms rather than retreating into ‘you wouldn’t understand’, says former HMRC official
ActionAid has changed the wording of the introduction to an allegation, made on its website, that Associated British Foods ‘has used a range of loopholes to avoid paying taxes, shifting profits into tax havens and getting huge tax breaks’. That allegation, made in relation to a Zambian subsidiary, has been flatly denied by ABF. ‘We are not siphoning off profits from Zambia,’ the group’s tax director told Tax Journal last week.
ActionAid continues to claim on its website that ABF has been paying ‘virtually no corporation tax’ in Zambia.
‘This has cost Zambia an estimated US$27m since 2007,’ the charity said until yesterday. The sentence now reads: ‘A combination of tax haven schemes and special tax breaks has cost Zambia an estimated US$27m since 2007.’
Chris Jordan, tax justice campaign manager at ActionAid, told his predecessor Martin Hearson that he thought Hearson’s view – that ‘the headline web copy over-simplified the issue’ – was ‘reasonable’.
Hearson, who has hosted a lively discussion of the controversy surrounding ActionAid’s allegations, wrote on Wednesday: ‘ActionAid shouldn’t have gone out with [virtually] “zero tax paid” as its top line. It didn’t need to. It could have led on the $27m figure instead.’
There was a particular problem, he said, with the statement that ‘this has cost Zambia an estimated $27m’. He added: ‘The reason ABF paid [virtually] zero taxes from 2007-12 was mostly, if not entirely, because of capital allowances, not the practices criticised by ActionAid.’
As Tax Journal reported on Wednesday, a spokesman for ABF said ActionAid’s report, together with its press release, ‘downplays the importance of the capital allowances, and smears ABF as a result’.
But Hearson stressed that in his view the problem was ‘about the top line messaging, not the validity of the analysis underlying the report, which does acknowledge the capital allowances upfront’.
Hearson has also suggested that some of ABF’s statements have been ‘misleading’, and that the way in which companies respond to allegations is ‘rarely whiter than white’.
Visitors to the ActionAid website are still invited to ‘tell [ABF] to stop tax dodging in Zambia’ and ‘pay a fair share in Zambia’.
Being objective
Responding to suggestions that tax campaigners would benefit from ‘unbiased’ technical reviews of tax research prior to publication, Jordan told Tax Journal that the report on ABF had been independently reviewed at two stages by a former HMRC transfer pricing official. The second review was carried out after the charity engaged in ‘full right-to-reply’ correspondence with the company.
Mike Truman, editor of Taxation, told Tax Journal on Wednesday: ‘Tax advisers should perhaps offer to lend more support to campaigners, in the form of proper, unbiased and independent advice. Groups would need to trust our professionalism in being objective.’
Truman has been criticised for his recent decision to declare that Margaret Hodge, chairman of the Commons public accounts committee, was his ‘Tax Prat of the Year’. Some experts told Tax Journal that the ‘award’ was not a helpful contribution to what is already a largely polarised debate.
Despite Hodge’s combative style, and her adoption of what one barrister has described as ‘far too broad a conception of avoidance’, she is widely regarded as having been instrumental in bringing tax avoidance, and the need to modernise the international tax system, to the centre of political debate.
Responding to Truman’s suggestion, Hearson tweeted on Wednesday: ‘Do you think “Tax Prat” will have helped campaigners "to trust your professionalism in being objective"?’
‘You wouldn’t understand’
This week’s issue of Taxation features a satirical ‘guide’ for tax professionals on ‘how to handle a tax prat’. Wendy Bradley, a former member of HMRC’s ‘better regulation’ team who is now a PhD student researching the relationship between tax simplification and better regulation, wrote:
‘We are all tax professionals here, right? We get it. We understand. There is a continuum that goes from tax planning via tax avoidance to tax evasion, and we are always on the right side of it.’
However she added: ‘I am sure we have all had that uncomfortable feeling of trying to talk to someone who doesn’t speak our language. Perhaps you have come up against one of those people who thinks that country-by-country reporting is a good idea? What about someone who wants company tax computations or personal tax returns to be published? There are people who do not know that “there is no equity in tax” and think that there ought to be some kind of principle of fairness involved in taxation – imagine that!’
Bradley’s guide to ‘countering opponents’ suggested that readers should ‘control what your audience sees, attack the person – not the argument, argue against straw men, and deflect attention away from the specific criticism’.
‘Sometimes … you [will] find yourself in the middle of an actual conversation about tax avoidance,’ she wrote.
‘Well, worse things happen at sea, and in most cases you can get by with a few handy responses. Try one of these: “I think, with respect, you are underestimating the skills and quality of HMRC; If you collected VAT from a customer and did not hand it on, it would be a criminal offence; Evasion is illegal and tax avoidance is not; Delaware is not a tax haven; It is a supply chain management issue”.’
Bradley told Tax Journal today: ‘I think the interesting question is “who are the stakeholders in the tax conversation?” Responses to the PAC hearing [in which MPs questioned heads of tax at the big four accountancy firms on 31 January] were framed as if only people who "spoke tax" had any place talking about tax at all.’
She added: ‘But actually tax affects all of us, and we have a right as citizens to engage in the debate, even if we don't understand that "there is no equity in tax" and don’t know by what definition Delaware is not a tax haven. Tax professionals need to engage with that debate on the non-tax-expert's terms rather than retreating into the bunker of "you wouldn't understand”.’
