What’s a key challenge facing the UK tax profession today?
Trust in the tax system, including the tax profession, is lower in the UK than it used to be. The CIOT and other professional bodies can help by updating professional standards, as we have done in relation to preventing our members promoting abusive avoidance schemes. However, over 30% of all tax agents are not members of a professional body; the system itself is struggling to cope with the shift to a digitally based economy; and HMRC appears under-resourced in some areas – so there is a lot of work to do to restore the level of trust to where it will support the highest level of compliance.
What advice would you give to tax policy makers?
I think involve more academic thought in designing the broad framework of what should be taxed and how that should be taxed. Historically the UK has only had a small tax academic community, but this is changing, and they have much to offer in helping policy makers take a longer term and broader view of what is needed.
If you could make one change to tax law or practice, what would it be?
It would probably take more than one law change, but we need to narrow the differential between how employment is taxed and how self-employment is taxed. Whilst some say that self-employment should be rewarded by lower taxes due to less security/more risk, I don’t think the tax system should be used as a ‘subsidy’ or ‘compensation’ in this way. The existing differentials are so large they are distorting the way employers and employees behave.
What do you know now that you wish you’d known at the start of your career?
You don’t have to be good at everything all the time; failing, discovering you are not cut out for something or making a mistake isn’t a disaster. It’s what you take out of all your experiences, good and bad, that determines your career.
Are there any new rules that are causing a particular problem?
Coming closer to my own experiences in the taxation of multinationals, I continue to be concerned about the operation of the diverted profits tax. Originally it was supposed to affect a ‘handful’ of companies, by Autumn 2016 HMRC was talking about a hundred or more, and recently it appears the real number may be well into four figures. Even with the recent disclosure facility, I worry that this is a tax that will tie up HMRC resource for years to come for relatively low yield; we need to ensure that digital services tax doesn’t go the same way.
How do you see the tax profession evolving over the next five to ten years?
The biggest influence will be technology. Machine learning and artificial intelligence will continue to automate compliance processes. Blockchain computing provides opportunities for real time reporting of transactions to tax authorities, and real time payment of tax, especially taxes such as VAT. I can see large corporations ERP systems essentially being open to tax authorities, with some traditional audit activity replaced by automated data analysis. The profession will have to work out how it integrates the use of technology into the training of those working in tax.
Are the latest OECD proposals likely to finally solve the issues of base erosion and profit shifting by multinationals and ensure the giant tech companies pay their ‘fair share’?
Arguably, post the 2017 US tax reform, those tech companies will be paying tax somewhere, especially in the US. The OECD’s ‘pillar two’ proposals for a minimum level of tax on a global basis are designed to underline that. The ‘pillar one’ proposals are about where profits are taxed, rather than about whether they are taxed or not. The way it is going, it looks like some profits of tech companies will be moved from being taxed in the US to being taxed in other countries where they have sales or users, but this may be offset by profits of other companies also being taxed in ‘market’ rather than ‘value creation’ jurisdictions. Taking it all together, the net effect may be that no one country sees a particularly large change in its tax take, and companies may be paying broadly the same amounts in total, just to different places.
You might not know this about me but…
Don’t ring me between 7pm and 7.15pm on a weekday or a Sunday, because you will disturb my daily dose of
The Archers, which is sacrosanct!
What’s a key challenge facing the UK tax profession today?
Trust in the tax system, including the tax profession, is lower in the UK than it used to be. The CIOT and other professional bodies can help by updating professional standards, as we have done in relation to preventing our members promoting abusive avoidance schemes. However, over 30% of all tax agents are not members of a professional body; the system itself is struggling to cope with the shift to a digitally based economy; and HMRC appears under-resourced in some areas – so there is a lot of work to do to restore the level of trust to where it will support the highest level of compliance.
What advice would you give to tax policy makers?
I think involve more academic thought in designing the broad framework of what should be taxed and how that should be taxed. Historically the UK has only had a small tax academic community, but this is changing, and they have much to offer in helping policy makers take a longer term and broader view of what is needed.
If you could make one change to tax law or practice, what would it be?
It would probably take more than one law change, but we need to narrow the differential between how employment is taxed and how self-employment is taxed. Whilst some say that self-employment should be rewarded by lower taxes due to less security/more risk, I don’t think the tax system should be used as a ‘subsidy’ or ‘compensation’ in this way. The existing differentials are so large they are distorting the way employers and employees behave.
What do you know now that you wish you’d known at the start of your career?
You don’t have to be good at everything all the time; failing, discovering you are not cut out for something or making a mistake isn’t a disaster. It’s what you take out of all your experiences, good and bad, that determines your career.
Are there any new rules that are causing a particular problem?
Coming closer to my own experiences in the taxation of multinationals, I continue to be concerned about the operation of the diverted profits tax. Originally it was supposed to affect a ‘handful’ of companies, by Autumn 2016 HMRC was talking about a hundred or more, and recently it appears the real number may be well into four figures. Even with the recent disclosure facility, I worry that this is a tax that will tie up HMRC resource for years to come for relatively low yield; we need to ensure that digital services tax doesn’t go the same way.
How do you see the tax profession evolving over the next five to ten years?
The biggest influence will be technology. Machine learning and artificial intelligence will continue to automate compliance processes. Blockchain computing provides opportunities for real time reporting of transactions to tax authorities, and real time payment of tax, especially taxes such as VAT. I can see large corporations ERP systems essentially being open to tax authorities, with some traditional audit activity replaced by automated data analysis. The profession will have to work out how it integrates the use of technology into the training of those working in tax.
Are the latest OECD proposals likely to finally solve the issues of base erosion and profit shifting by multinationals and ensure the giant tech companies pay their ‘fair share’?
Arguably, post the 2017 US tax reform, those tech companies will be paying tax somewhere, especially in the US. The OECD’s ‘pillar two’ proposals for a minimum level of tax on a global basis are designed to underline that. The ‘pillar one’ proposals are about where profits are taxed, rather than about whether they are taxed or not. The way it is going, it looks like some profits of tech companies will be moved from being taxed in the US to being taxed in other countries where they have sales or users, but this may be offset by profits of other companies also being taxed in ‘market’ rather than ‘value creation’ jurisdictions. Taking it all together, the net effect may be that no one country sees a particularly large change in its tax take, and companies may be paying broadly the same amounts in total, just to different places.
You might not know this about me but…
Don’t ring me between 7pm and 7.15pm on a weekday or a Sunday, because you will disturb my daily dose of
The Archers, which is sacrosanct!
