IN RECENT times, a day has rarely passed without at least one media outlet reporting on major corporations accused of avoiding or “dodging” their tax commitments.
Descriptions such as “morally repugnant” have become common phrase among journalists and politicians who hope that, by shining a light on tax avoidance and evasion, major businesses will pay what is considered to be their “fair share” of tax in the UK.
One side effect of this moral crusade has been the significant impact this has had on SMEs throughout the country. Now that the issue of tax planning has been politicised and evolved into a tabloid feast, many business owners shy away from dealing with an issue that can have a significant impact on their bottom line. Putting it simply, we’ve created a level of caution that is hitting growth at a time when our economy is still very much in recovery mode.
Robust rules are now in place to tackle tax avoidance, including the General Anti-Abuse Rule (GAAR). This is just one part of the government’s mission to strengthen the tax arrangements that exist in the UK.
Tax has become an emotive subject, but that shouldn’t discourage business owners from seeking proper advice and exploring the options that best suit their organisation.
A number of initiatives and options are available that are perfectly legal and in fact actively encouraged by the government – to drive sustainable growth and encourage businesses to flourish after a sustained period of economic difficulty. These include tax reliefs for entrepreneurs and employee shareholders, as well as incentives for businesses creating and managing IP in the UK.
The taxes we pay in the UK are an essential element of life in a flourishing democracy and it is right that organisations or individuals who seek to illegally avoid their commitments are held to account.
However, this should never dissuade business owners from seeking proper tax-planning advice and making the most of a robust system that has been designed to help our economy grow sustainably.
• Vishal Chopra is tax director at Grant Thornton UK LLP