24 January 2013

ACCA: Tax system should not be used to regulate banks

The panel was formed by the Parliamentary Commission on Banking Standards (PCBS). The aim of the panel is to gather evidence for the PCBS on topics such as the tax conduct of banks and the application of IFRS. ACCA was invited to offer verbal evidence to the panel following its written submission in response to a call for evidence made on 4 December, 2012.

In respect of imposing a special tax regime on banks, Chas Roy-Chowdhury, Head of Taxation at ACCA, commented about ACCA’s written submission: "We do not think it is appropriate to think of using the system as a tool for imposing specific cultural or moral frameworks on particular types of businesses". However, ACCA agrees that issues of culture and value should be of great importance to any business: "From the perspective of corporate governance rather than the tax system".

ACCA believes that the tax system should be as simple and consistent as possible for all taxpayers. "The simpler the system and the fewer the differential levels of taxation available within it, the less will be the incentive to ‘plan’. If the system is complex then advisers and intermediaries can, and indeed must, be aware of all the alternatives within it."

Nonetheless, there is a place for proportionate and confidential monitoring mechanisms to ensure appropriate corporate governance in relation to tax compliance. 

The panel also received written evidence from ACCA on IFRS. Chas Roy-Chowdhury concluded: "In our view, financial reporting standards and principles did not cause the financial crisis. However accounting standards and the quality of their application should both be re-considered as to whether there are improvements that could be made arising from the crisis."

Overall, ACCA considers that the adoption of IFRS has improved and promoted transparency in financial reporting.

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