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UK Business Responds To EU Tax Transparency Reforms

Wednesday, 29 May 2013   (0 Comments)
Posted by: Author: Robert Lee
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Source: Robert Lee (, London)

A note of caution has been sounded by the UK's business community over the European Union's (EU) increasingly tough stance on tax fraud and evasion.

Members of the European Council last week published conclusions to the effect that combatting such activity has now become essential. In particular, the Council signalled its intent to prioritize a broader system of automatic information exchange, implement the European Commission's recommendations for a stronger position on so-called tax havens and aggressive tax planning, and reform the taxation of savings.

Most controversially perhaps, the Council also decided to consider potential changes to reporting rules. The Directives on the disclosure of non-financial and diversity information by large companies and groups may in future be amended to require a country-by-country reporting system.

Commenting on the proposals, Katja Hall, Chief Policy Director of the Confederation of British Industry (CBI), said that it does not appear that the Council is seeking full country-by-country reporting for financial or tax data. Were such reporting made mandatory, "it risks reducing public understanding of the tax debate by swamping people in highly complex data with no context."

Mary Monfries, head of tax policy at accountancy firm PwC, believes that were EU to go ahead with these changes, the "emphasis must be on information that's understandable and capable of being used by the intended recipient, rather than data for data's sake." Both Hall and Monfries raised concerns that the extra red tape involved would be considerable.

Hall did nonetheless state the CBI's support for the mooted "global register of beneficial owners, the automatic exchange of information and the OECD work to update international tax rules for the digital age."

Referring to the UK in particular, Andrew Terry of law firm Withers, warned that the Government "needs to be very careful about the changes it wishes for in the current system of taxing international trading profits." By way of example, Terry suggested that were "ecommerce trading by a company based in one country, with consumers based in another country … to become subject to tax in that other jurisdiction … UK retailers supplying consumers in the US could find themselves subject" to higher US corporation tax rates. "This would not support the UK government's purported aim to be the most competitive tax system in the G20," Terry added.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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