BREWER MORRIS-Transparency is key

UK (SANEPR.com) September 2, 2008 -- Among a lively line-up of speakers, it was particularly useful.tO hear from Chris Tailby, director of the anti-avoidance group at HMRC, on the department's approach to anti-avoidance.
Transparency in all tax dealings was a common theme throughout the day's presentations. |ohn Connors, deputy group tax director at Vodafone, outlined the new environment for tax risk management. David Clayton, a corporate tax partner based in one of PricewaterhouseCoopers London's tax groups dealing with large listed companies, co-developed PwC's Tax Transparency Framework, which sets out a framework to allow listed companies to communicate tax clearly to their wider stakeholders. He explored the theme 'does tax reporting affect your share price?' Answer: of course it does.
He highlighted the aspects of a changing tax environment, including the fact that more stakeholders are interested in tax; increased pressure for more transparency; globalisation; the role of private equity, hedge funds and sovereign wealth funds; more aggressive tax authorities; governments' need to raise additional revenues; new taxes, including a shift

from direct to indirect taxation; and increased complexity to keep on top of.
Michael L'Estrange, head of the international tax group at Watson Farley and Williams LIP, talked about applying the anti-avoidance rules. He touched on the legislative anti-avoidance rules; the courts' approach to anti-avoidance; disclosure; and tax planning.
Looking at the resources of tax departments and staffing levels, Mark Brewer and Matthew Gravelle from recruitment consultants Brewer Morris revealed that over the past 12 months, inhouse tax departments have either remained the same or had small increases as the result of increased compliance and reporting requirements, business growth and general risk management.
However, Gravelle said there were challenges ahead. In their annual survey of tax departments, 67% of respondents did not anticipate any growth in their departments over the next few months. This was down to budget constraints, head-count controls and the impact of the credit crunch.
The current recruitment climate was pervaded by a shortage of well-qualified tax accountants, exacerbated by the Big Four buying back candidates. 23% of respondents found they had to pay a lot more for good candidates than they had anticipated, and also had to wait a lot longer for the right candidates to come along.
However, Brewer predicted that there would be more candidates coming on to the job market over the next few months, and that salary expectations would reduce.
Alistair Cliff, director of Deloitte's business tax practice, spoke about dealing with uncertainty and the new HMRC clearance process. That process is an opportunity to obtain written confirmation of HMRC's view of the tax law applying to a specific transaction or event. But there is a lot of uncertainty about entering the process with HMRC.
Chris Kell, head of UK tax compliance, HSBC, offered 10 tips for managing a successful HMRC relationship - or 'how not to have a war". In order, the tips were as follows: transparency; help HMRC understand (including access to senior management; the Partnership Enhancement Programme (PEP); HMRC/ Treasury consultations); active relationship management; keeping HMRC informed; plan how to resolve issues; consider contentious issues in advance; seek agreement at all stages;

decide if deal with fiscs unilaterally or multilaterally; consider litigation (including your own or others'; and EU matters and 'certainty'); and check HMRC are meeting responsibilities.
Kell told delegates: 'You get a lot back from HMRC in return for transparency and disclosure. Our experience of the enhanced taxpayer relationship has been good. It shows that taxpayers are looking for an open workmanlike relationship, so when you do have a problem, you can consult your ERM partner.'
At this point in the proceedings HMRC's Tailby added: 'We want to demonstrate that where big businesses have a good relationship with us, that is a good thing. We have to demonstrate that there is real value in a good relationship.
'In consultation, we need to know what is good for business. Sometimes issues are not raised in the consultation process that should be. If you're in the civil service, in the style of Sir Humphrey, you have to cover your back. On the other hand you have to make sure there is not too much consultation, because businesses don't have time. Lots of what Chris Kell said really gelled. "I commend it to the house"!'
Tailby praised the PEP scheme. 'HMRC are keen to get businesses into these. It helps our people understand the drivers of business; for example, what does it mean to be a high-risk business? Interaction and the free flow of information is a good thing.'
David Evans, director of international tax services at Ernst & Young, gave delegates a very useful EC) case update, and outlined the practical implications for UK business. Member states have got more savvy in defending cases, he reported, and it is no longer the case that 'if you put a donkey in front of the ECJ, it would win its case'. The tide is turning so that it's not always the case that the taxpayer wins.
Last but not least, Vincent Oratore, managing director of Banque AIG, delivered an update on the tax issues for corporates to consider when using financial products in commercial transactions. Oratore is a past chairman of the ClOT's technical committee and is also a council member, now vice-president.
The day's events were chaired by Chris Lallemand, co-chairman of the CIOT Commerce and Industry Group and national tax consultant, Smith & Williamson.
The conference was organised in association with CCH, Tax Adviser's publisher.