Her Majesty's Revenue and Customs published a consultation paper earlier this week titled Improving Large Business Tax Compliance: see here (pdf). The paper sets out three main proposals: [1] a requirement, through law, for all large businesses to publish their tax strategy; [2] a voluntary code of practice on taxation for large businesses; and [3] a targeted 'special measures' regime, directed at those large businesses that do not engage with HMRC in an open and collaborative manner or persistently undertake 'aggressive tax planning'. What is meant by aggressive tax planning is explained in the paper: "Tax avoidance or aggressive tax planning involves bending the rules of the tax system to gain a tax advantage that Parliament never intended" (see annex c).With respect to the first proposal, the intention is that there should be a named individual, at board level, responsible for the strategy and, in the words of the consultation paper, "owning and signing off" this strategy. Views are sought on what should be in the strategy and subject to disclosure. The paper suggests that the tax should strategy should cover a business’s attitude to tax risk, its appetite for tax planning, and its approach to its relationship with HMRC.
The factors influencing businesses' tax strategy have recently been explored in an HMRC research report titled Exploring Large Business Tax Strategy Behaviours: see here (pdf). Some of the research findings are referred to in the consultation paper.
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