Nov 11 2011

Worshipful Company of Tax Advisers: Tax Journal responds

Posted by: Nick Shaxson in: Thoughts

The Tax Journal has done a good bit of research in response to my recent post looking at the City of London’s 108 Livery Companies (if you haven’t yet and have time, read my earlier post before reading this). The Tax Journal’s opening paragraph starts:

Leading tax advisers have defended the role of the Worshipful Company of Tax Advisers (WCOTA), a livery company of the City of London, after an influential tax campaigner said he found the company’s links to the City and its Lord Mayor ‘ever so slightly sinister’.

I did indeed say that. The WCOTA replied, saying essentially that it is not a political body, does not lobby, and does a lot of work for charity.

OK, to be precise, I never said they did lobby. I said they provide some extremely high-powered support to the Lord Mayor of the City of London, who definitely does lobby. In fact, WCOTA itself says:

“The Company’s contribution is to help him understand the related tax issues and to lobby for improvements.”

So that was a bit of a misleading denial by the WCOTA, in my opinion. The Tax Journal, which is refreshingly frank about its own connections (the head of tax at the Journal’s parent company is on the WCOTA Lord Mayor’s Briefing Group.)

The Tax Journal has flushed out some answers from Peter Gravestock, the Master of WCOTA, about what the Lord Mayor’s briefing Group does. There is, first, a lot of work for charity – the City of London Corporation spends a lot of time talking about its charitable work (and to be, er, charitable to them, the City Corporation does do a fair bit of charitable work such as its support for the Barbican and its London Symphony Orchestra, as well as for a number of lesser charities.)

Gravestock went on:

“We provide briefings to the Lord Mayor and his team ahead of foreign visits so they are well informed on tax issues. . . . This is a sensible use of the tax expertise of our members and is similar to the work done by other organisations such as the Chartered Institute of Taxation (CIOT) when they brief politicians on a non political basis of all parties at Westminster.

Well, it depends on what he means by ‘sensible.’ If you take the view that the Lord Mayor’s role as an official lobbyist for financial liberalisation (including in the area of tax) is the way forwards, then you may take that view. But how similar is its work to that of the CIOT? The CIOT is an apolitical organisation dedicated to promoting “education in taxation with a key aim of achieving a more efficient and less complex tax system for all.” Which might be a fair goal to aim for – though that word ‘efficient’ in the field tax can be an extremely slippery one – the UK tax profession, is heavily infected with the notion that ‘efficient’ means ever lower taxes (for wealthy individuals and corporations.)

Now this next bit is interesting.

‘All these briefings, like the CIOT’s responses to consultations, concentrate on the technical and practical issues involved: we do not comment on tax rates which we leave to politicians.’

WCOTA is also helping in the Lord Mayor’s new ‘Restoring Trust in the City’ initiative, said Gravestock.

‘This aims to encourage and embed best practice and ethical values in all businesses which operate in the City. Furthermore it promotes professional standards and values within the tax profession.’

So he says ‘we do not comment on tax rates.’ I’m hardly surprised: on a foreign visit, to comment disapprovingly on a country’s  tax rates would constitute unacceptable interference in its sovereignty. But tax, of course, is about far more than tax rates. It’s also about the tax base: what, if anything, gets taxed, and when and where and how it gets taxed. That is one huge, complex subject. And there is no way that the Lord Mayor, with his efforts to get a more ‘competitive’ tax system in the UK and the aim of financial liberalisation, is going to steer clear of all of that. And, at the end of the day, the commentary on tax rates will come, even if couched in words like ‘competitive.’ It seems to me that Gravestock’s comment, if taken at face value, is incompatible with the Lord Mayor’s official duties. So I guess we shouldn’t take them at face value.

And as for that Restoring Trust in the City – well, WCOTA may be doing that through promoting standards and values. But you can be sure that the Lord Mayor is aiming at restoring trust by all means, fair and foul, in the Bob Diamond sense of the word.

Next, I’m all for professional standards in the tax profession, and I’m even for promoting values in the tax profession. But this brings us to a very big question: what exactly are those values? And here, in the context of the Lord Mayor’s briefing group, I think we have to turn to WCOTA itself, which as I previously noted, involves “promoting the UK’s financial services industry. . . to help [The Lord Mayor] understand the related tax issues and to lobby for improvements.”

So I think that their defence of the WCOTA leaves the key questions unanswered. Read my post again, and see if you feel satisfied. And at the end of the day, the Tax Journal repeats one of my earlier assertions:

‘I think that at the end of the day it boils down to the question of whether you think that the financial services sector has grown too powerful and hard to reform, or whether you think that Britain needs just more and more finance: the more the merrier. If you take the latter view, you may perhaps find all this stuff benign. I don’t.’

I am glad to see that some of the documents that weren’t available on the WCOTA site when I first looked are now up there. I’d hazard a guess that my enquiries have helped shine a bit of light here.

I’ve said before, and I’ll say it again: I think that the influence of the City of London Corporation in shaping the national consensus on finance is absolutely unquantifiable. But it’s been going on for centuries – and it is incredibly important. And I believe WCOTA plays a role, and an important one too. None of the statements I’ve seen in the Tax Journal have disabused me of that thought.

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