Tax Transparency - To whom and for what purpose?

31 May 2016

The UK’s biggest companies remain under pressure to respond to the various stakeholders who are interested in their tax affairs. This increased attention on tax is influenced by a number of factors, including media headlines, changes in regulation and reviews into public disclosure by the Financial Reporting Council. All of these have helped to drive the broad trend towards increased tax transparency.

The third edition of our Tax Transparency review of the FTSE100 is published today. We review publicly available information – including annual reports, corporate responsibility reports, websites and standalone tax documents - looking at five areas of voluntary disclosure, and this year we have broadly seen increased disclosure compared to the previous year.

In our latest report, we review the UK’s largest listed companies, focusing on five areas of tax communication. We give a snapshot of the number of companies making disclosures in each area and the changes we have seen in the past year. We explain the variety of communications we have seen within each area and the benefits of each type of disclosure.

The largest increases have been in the number of companies communicating their approach to tax and giving details of their tax governance procedures.

This trend towards increased disclosure is not surprising. Over the last year the UK tax environment has been shaped by increasing interest from public, press and broader stakeholders in the amount of tax and tax strategy of big and small business. This has included the Government making changes in regulation e.g. around Country-by-Country Reporting to tax authorities and public disclosure of tax strategies; and the Financial Reporting Council announcing a thematic review into tax disclosures made by companies in the FTSE350.  

While many companies choose to respond with extra disclosures, one approach would be to first ask who wants to know more and what information would be most helpful to them?

Our Tax Transparency Framework asks the question: ‘Tax Transparency: To whom and for what purpose?’, before looking at the voluntary disclosures that might help. It’s a framework which encourages companies to consider the business case and stakeholder appetite for increased disclosure, and recognises the fact that tax transparency is not a ‘one-size-fits-all’ approach.

By exploring these themes, companies can aim to bridge the gap between what their stakeholders are looking for, and how much of this information is already required by mandatory tax reporting requirements. In addition companies can identify where further tax information will add value, and this can address the crucial question of how this can be communicated in a way that is understandable.

As companies become required to disclose their tax strategy, they need to be confident that their internal control framework is fit for purpose and consistent with their external messages. Many companies are developing communication plans to brief internal parties and respond to external queries on tax.

Findings of our transparency review of the FTSE100 for 2015 year ends can be found here.

Andrew Packman

PwC | Total Tax Contribution and Tax Transparency leader
T: +44(0)1895 52 2104



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