Explaining tax isn't easy

December 12, 2013

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By Tom Dane

Not long ago if I told a friend I worked in tax, they tended to change the subject. How things have changed. These days I usually face a barrage of questions on the latest piece of alleged corporate tax dodging. In most cases the questioner’s eyes then glaze over as I try to explain deferred tax, transfer pricing, centralised operating models, tax reliefs and government policy objectives. Occasionally though I’m able to dispel a few myths and highlight the complexities and commercial realities of international tax.

Explaining tax is not easy. And if it’s difficult for me talking to someone face to face at say a Christmas party, I imagine it’s more difficult for companies to do so in the face of an often sceptical, if not openly hostile, audience and through the blunt instrument of corporate reporting.

More companies though are trying to do this. Last Monday’s Building Public Trust Awards for tax reporting showcased some of the businesses that have found new ways to explain tax. The awards lunch was attended by representatives from large companies, from Parliament, HMRC, trade associations, civil society organisations and the press.

Speaking at the event David Gauke MP, Exchequer Secretary to the Treasury, emphasised the importance of trust for the effective functioning of the tax system and the role of business in promoting the understanding of tax that underlies that trust.

It's clear to me that the debate on how business is taxed will continue and many businesses are preparing to contribute to that debate. For those looking for new ways to talk about tax some ideas can be found in our latest publication on how companies are explaining their tax affairs. I think there are some great examples in there of how to explain difficult tax concepts, so perhaps I should hand it out at Christmas parties to give my voice a rest.

Tom is a manager in our Tax Transparency and Total Tax Contribution Team. For more information, contact Tom at [email protected] or visit our website.