Building Public Trust through Tax Reporting

There can be little doubt that concern about companies paying their "fair" share of tax has impacted public trust in business. It's equally true that people often underestimate the amount of tax companies pay. How do you reconcile these two positions? I can already imagine people questioning my point about companies paying more tax than you think, citing headlines about corporation tax payments. But what if a company is paying less tax than expected because of reliefs properly available to it? And what about the other taxes that companies bear, such as business rates or irrecoverable VAT? These taxes don't replace paying corporation tax that's properly due, but they're relied upon by Governments just as much (if not more so) to fund public services and social needs. And it's only by getting the real facts heard that there can be proper debate on the real issues.

I think it will always be challenging for business to get its voice heard clearly and without misunderstanding, but companies have a greater chance if they provide clear, relevant information and explanation on their approach to tax. This is the focus of our work around Building Public Trust through Tax Reporting. We use our Tax Transparency framework to review tax disclosures in the FTSE350 and our awards this week attracted more interest than ever.They recognise good practice in tax reporting and transparency, looking at different approaches by different industries, and for both UK and multinational businesses.

What's clear is that increasing numbers of companies are making voluntary tax disclosures. Whether within annual reports or separate stand-alone reports, businesses are doing more to set out and explain their numbers on tax. Often there's an overall narrative on the approach to tax, with some firms indicating how this aligns with the business' values.

With more mandatory tax reporting regimes coming into force, there's more reason than ever for businesses to ensure that the data disclosed provides real information that doesn't get misunderstood and is helpful to the user. Trust is unlikely come from simply conforming with reporting obligations, but by putting the numbers in context. The Awards this week show that many businesses have already moved in this direction.

Mary Monfries, Head of Tax Policy and Regulation
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