The Confederation of British Industry (CBI) has published a statement of principles that outlines how companies should conduct their tax affairs.
The aim of the statement is to improve transparency and understanding, which includes using narrative reporting. As a result, the CBI strongly recommends that British businesses, and all companies operating in the UK, follow its principles.
According to the statement of principles, UK businesses should only engage in “reasonable tax planning” that is aligned with commercial and economic activity and does not lead to “an abusive result”. Businesses should also be open and transparent with HM Revenue & Customs about their tax affairs and provide all the relevant information that HMRC needs to review possible tax risks.
The statement emphasises the role that businesses have to play in building public trust in the tax system. It suggests they consider how to “explain more fully to the public their economic contribution and taxes paid in the UK”.
CBI director-general John Cridland said: “UK businesses make a huge tax contribution to the UK economy, paying £161bn 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 straightforward and accessible narrative, ideally on their website.”
Sally Percy is editor of The Treasurer