Arctic Systems – oh heck!

by admin on July 28, 2007

in General

I’m really late on this but matter not and I’ll keep it short. It’s good to see the small business person win in the battle for common sense in the Arctic Systems case. It is interesting to note Richard Murphy’s response to the government’s announcement of amending legislation to plug what it sees as a loophole. Despite the fact the consequences as described in the case were anticipated by Norman Lamont back in 1988.

What is of far greater interest are the very large number of reads (13543) on the AWeb article covering the story. That’s one heck of a lot of tax practitioners out of the total offering advice. If HMRC is taking any notice at all, it would do well to note the deep concern those readers and commenters feel about HMRCs pronouncement on the matter.

Now is the time for the Tax Faculty, ICAEW to be making a stand on behalf of its members and their clients. The question is – will it and even if it does, will it have the desired effect? So far, ICAEW has only asked for ‘clarity and certainty.’ In this context, Nichola Ross Martin’s comments are apropos:

Given the contribution of small business to the economy and the chaos of a small business tax policy in the last ten years (which appears to be totally driven by knee-jerk reaction such as the above statement), I had honestly hoped for something a bit more mature under the new Chancellor. Unmarried couples share things, business partners share things and of course married couples do the same. Change the rules and you simply end up discriminating against one group.

In the ensuing debates, it will be interesting to see how this works its way out. I expect a battle royal between professionals and HMRC before any further legislation is enacted. It will be interesting to see how tax justice proponents like Richard position themselves on this issue. If Nichola is right, then it is difficult to see how the government’s current position is tenable without offending against the very issues of social justice that Richard holds dear.

It will require some genuine innovation on the part of the tax legislators to come up with a policy that is fair to all forms of civil partnership because having raised the issue as one for amendment, it can hardly duck out without raising fresh questions.

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OK

Found it now

I used a magnifying glass!

Mark

Can I start with a basic problem? That link does not work, and like most pages on the ICAEW web site, it's almost impossible to find your way to anywhere.

That's not thought leaderswhip. That's confusion.

But, if I can find it I will read it.

Richard

For the avoidance of doubt none of my comments above were intended to refer to Richard.

We'll have to agree to disagree re ICAEW's involvement in securing changes to the tax system. There is no hesitancy in criticising HMRC where this can have an impact - see for example the Head of the Tax Faculty (Frank Haskew's) comments in the Treasury committee's report published on 23 July. Note also who else did or did not get asked to comment from the profession.

The Tax Faculty is very open about what it's doing (see it's free weekly newswire and web pages) but balances detailed publication of technical arguments with a desire to minimise speculative discussions in the media. Any member of ICAEW is welcome to join one or more of the tax technical committees to gain a more accurate perspective on the amount of work that goes on and how this is prioritised.

I hope Richard will welcome the recently launched tax thought leadership prospectus that has been developed by the ICAEW Tax Faculty. Copies available from www.icaew.com/taxfac

"Experience has shown that grandstanding in public does not secure the desired changes in the tax system." But then nor does keeping it quiet!

"It also damages the reputation of the public body concerned such that their views are seen by those in Treasury, Gov’t and HMRC as being more directed at headline grabs than serious input to the debate." Doesn't seem to worry any of those bodies in the public statements that they make. Why be scared of them?

Well, knowing both participants in this discussion adds a certain flavour.

And I have to say I think Mark has got this one seriously wrong.

1) Dennis is right. I am controversial. Maybe I've even grandstanded. And it's sure as heck moved the tax debate along. The ICEAW has no record of doing so bar one or two technical issues.

2) Members want to know what the ICAEW is doing. Working behind closed doors does not achieve that. Abd candidly, for most members that also leaves the suspiscion that the ICAEW was party to changes thye think unwelcome (even if that's wildly untrue).

3) The ICAEW is both a) horribly reactive and b) very narrow minded in its reactions to issues. It couold be proactive. And just occassionally it might show that it knows there is a purpose for taxation in society as well. But that's usually hard to discern in any statements it makes that do reach the press.

Sorry Mark. But the ICAEW is a poor performer on these issues in my opinion. And I wish it were better. But if that were to be the case it would need to listen more, be more discerning, be more willing to argue its case, think more widely and to stand up for what it thinks right even when contrary to popular opinion, inclduing that of some members (that's called professional judgement)and argue its case.

It's not doing that.

Richard

"Experience has shown that grandstanding in public does not secure the desired changes in the tax system. It also damages the reputation of the public body concerned such that their views are seen by those in Treasury, Gov’t and HMRC as being more directed at headline grabs than serious input to the debate. The Faculty and the rest of ICAEW have long sought to avoid that consequence in the interests both of their members and taxpayers generally."

In an age of transparency that is exactly the opposite of what I'd expect. Makes it sound like an old boys' club.

I didn't say grandstanding but a stand. Different. But given the appalling state of internal PR it's probably not such a good idea.

On the contrary Dave Hartnett has not been slow to come out and have a crack at practitioners in recent times and says he is willing to debate in the public domain.

I don't see public statements doing Richard Murphy's cause any harm whatsoever and he IS controversial.

At present ICAEW looks emasculated with little relevance (as it has for more than 30 years to my certain knowledge.) If it is to act in the interests of its members then it's about time it took positions. Its members deserve better and it knows that.

I'm not sure what you mean by suggesting that the ICAEW's Tax Faculty should "be making a stand."

It's not fair to judge the Tax Faculty, or any comparable body, by reference to what they say publicly. I know a number of dedicated members and representatives of the ICAEW Tax Faculty who have been doing far more than you imply above over the last couple of years.

For example extensive representations, written and verbal, were made in response to the Government's (stalled) reviews of small business taxation. This process continues and much reference has been made to the Faculty's efforts on behalf of ICAEW members and their clients in Faculty and ICAEW publications in recent years.

The motivation for the Faculty's involvement has been to help simplify the tax system so that we end up with a fairer and more logical approach to the taxation of smaller businesses, whether incorporated or not.

Experience has shown that grandstanding in public does not secure the desired changes in the tax system. It also damages the reputation of the public body concerned such that their views are seen by those in Treasury, Gov't and HMRC as being more directed at headline grabs than serious input to the debate. The Faculty and the rest of ICAEW have long sought to avoid that consequence in the interests both of their members and taxpayers generally.

(You'll appreciate that these are merely my personal views, albeit informed by my experiences as Chairman of the Tax Faculty 2003-2005)

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