Thank you for doing me the enormous honour of electing me as your President for the coming year. I can think of no greater compliment than being chosen by one’s peers to take on such a role.
I realised recently that this year marks the thirtieth anniversary of my involvement with CIOT and ATT. Looking back during that time, and over a career which goes back a little further than that, there have been tremendous changes in both the tax system and the way in which we work. In fact I think someone setting out on a career in tax today would not recognise the professional world I joined and probably find it positively stone aged. No personal computers so returns were completed by hand, no mobile phones, a corporation tax rate of 52 percent, a 30 percent basic rate of income tax with a 60 percent top rate and tax legislation that neatly fitted into two slim volumes, one Yellow Book and one Orange. Today of course every professional has a computer on their desk or in their bag, if not both. Mobile phones are everywhere, tax rates are low, but we have the longest and one of the most complex tax systems in the world.
The pace of change shows no sign of slowing and, putting aside the impact of Brexit on the basis that you should always focus on controlling the controllable, there are a number of challenges facing us over the next few years. The two biggest of these are undoubtedly MTD closely followed by maintaining the standing and credibility of the tax profession in the eyes of government and the public.
Now at this point I was going to critique MTD and urge the government to show some flexibility, revise the timetable and seriously consider whether so many businesses need to be compelled to adopt this new system in such a short time.
Fair points. Reasonable points. Points – as Ralph indicated – that we and other professional bodies have made before.
And I am delighted that we have made them so effectively, so persuasively in fact that the government have listened and earlier today announced a major change in their approach to digitalisation.
This is extremely welcome news.
The ATT and other bodies have consistently recognised the potential benefits of MTD but we have at the same time warned that the over-hasty introduction of compulsory digital record keeping and quarterly reporting could jeopardise the realisation of those benefits.
HMRC now have an opportunity to consider carefully how MTD might best be phased in. The deferral creates an opening for large-scale voluntary testing of MTD, followed by a proper evaluation of outcomes, so that the programme has the greatest possible chance of succeeding.
Tax professionals must grasp this opportunity to work with HMRC to devise a version of MTD that is visibly ‘doable’, fit for purpose and works for their clients, the Exchequer and themselves. Many of our members have been gearing up for the introduction of MTD from April 2018. It is essential that HMRC harnesses that energy. It is also essential that HMRC has an adequate budget for a sustained publicity campaign to explain how and when MTD will be introduced and how businesses can prepare. Very few businesses currently understand the impact which the MTD obligations will have on them.
The ATT stands ready to work with HMRC in order not just to make tax digital, but to make tax doable.
Moving on, what about professional credibility? Over the years the artificial and contrived arrangements that seemingly create a tax advantage out of thin air which were marketed by a small number of often unaffiliated advisers have not helped the standing of the tax profession as a whole. Of course, these types of arrangements are now clearly contrary to the PCRT rules that the professional bodies have adopted and which HMRC have endorsed. Attitudes have changed over the years with politicians and social media demanding that everyone must pay their “fair share”, without actually saying what that is, and we clearly need to adapt. A literal interpretation following the strict letter of the law but with the intention of achieving an unintended consequence, on which many of these schemes were based, is clearly no longer acceptable and it is increasingly necessary to take a purposive approach looking to the intention of the legislation. The length, complexity and to my mind the poor and confusing drafting of much of our tax code does not help the man or woman in the street who has little chance of fully understanding its workings. Although we have our differences we enjoy a good relationship with HMRC which we must preserve and enhance. We need to remember that we are all, ATT members and HMRC staff, part of one tax profession. We both want the same thing, the right amount of tax paid at the right time and we both need to act with integrity and in a professional way to achieve this. Unfortunately, the public perception that those who can afford expensive advisers do not pay their fair share is going to be more difficult to overcome.
So what do I see as the role of the ATT in all of this? As a charity we exist to advance public education in and promote the study of the administration and practice of taxation, to prevent crime and to promote the sound administration of the law for the public benefit, and we do what it says on the tin. We promote the ATT family of qualifications with prospective students and their employers. We provide the public with a pool of highly qualified tax professionals, our members, and ensure by setting and monitoring compliance with CPD rules and providing a range of training events that they remain up to date with current developments. We reach out to schools and the public at large to explain about tax. We support an independent arm’s length disciplinary process to maintain public confidence in ATT members. We also work to support, and dare I say educate, government, often at the highest level, with our technical team scrutinising new legislation, responding to consultations, pointing out anomalies and acting as a robust critical friend. I am delighted that in the last few weeks we have been able to expand our technical team to three technical officers, further enhancing our ability to respond, to scrutinise and to engage with government at all levels.
We will continue to do all of this and more but I have three challenges I would like to set today. For members let us know about the issues and problems you face in day to day practice so that we can identify common themes and work with HMRC to deal with these; for employers let us know what you want from our qualifications so that we can continue to keep them relevant; and for the public if you have a tax problem talk to an ATT member.
The restaurant critic, Jay Rayner, once said that eating at a Michelin starred restaurant allows you to rent a rich person’s life style for a few hours. Being elected as your President allows me to borrow an important person’s office for a few months. I promise to take good care of your Association, to follow a Past President’s advice not to break it, and to hand it on in twelve months’ time in the same, or better, condition as it is today.