In a fringe session held by CIPFA and the think-tank CoVi at the Conservative Party conference, principal adviser on economic justice at Christian Aid, Toby Quantrill, called on the UK to be a global leader on transparency when it leaves the EU.
He highlighted polls that showed around 83% of the UK public think tax avoidance is wrong even if it is technical legal, and only one in five people think any political party has done enough to tackle the issue.
“There’s a loss of trust and a key element of the post-Brexit tax system must be to ensure that the public begin to trust companies and the tax system again,” he said.
In particular, Quantrill called for country-by-country financial reporting for companies based in the UK.
“What this is designed to do is to provide a clear picture of where profit and economic activity may be misaligned,” he said. “There may be very good reasons for that, but that would then need to be explained. This helps bring into the open a much clearer picture of what is going on and where the problems may lie.”
He also called for all UK jurisdictions including overseas territories, such as the British Virgin Islands, to put in place a register of beneficial ownership of companies to improve transparency.
This is something that is going to happen in time, following the Panama Papers and other disclosures, Quantrill insisted. “We can either get ahead of the game, show a message about the type of country that the UK is and show leadership, or we can wait for these things to hit us. Let’s do it now.”
Also speaking on the panel, Stephen Herring, head of taxation at the Institute of Directors, made the case for opportunities in tax reform following Brexit.
He said that the technique used to reduce tax liabilities mainly originate from the imperfections in the US tax system. Although he said that the IoD and its members were in favour of the BEPS corporate tax reforms put forward by the OECD, these were being “gold plated” by the EU.
The UK would be free of this after Brexit, he said, meaning there would be a chance for bold tax reform.
“Simplification to make the UK a more competitive place for entrepreneurs and foreign direct investors is what we need,” he told delegates. “I am never afraid of tax competition, I think it is an entirely valid concept and it is one of the few things that stops the state taking higher and higher percentages of people’s money and choosing how to spend it. The UK should be determined to be one of the winners from tax competition and not a loser.”
Attendees also heard from economist Vicky Pryce, a former joint head of the UK Government Economic Service.
She said that the UK will need to reconsider tax policy after Brexit, to take into account the regional dimension, including how localised business rates can be used to boost economies. Also up for debate will be the extent to which capital allowances can be used to promote growth in different regions of the UK.
