Why is Fair Tax so important?
This article will take approximately 2 minutes to read
Published 8 Jun 2023 in Colleagues
This week is Fair Tax Week (8-18 June), celebrating the difference businesses like Midcounties are making by paying a fair amount of tax. With the Society just being re-accredited with the Fair Tax Mark, we spoke to Stephen Pearsall, Senior Tax Accountant, to find out why Fair Tax matters.
Midcounties was one of the Fair Tax Pioneers in 2014,
along with The Phone Co-op
89 businesses
now hold the Fair Tax Mark
Globally, US$250bn of corporate income tax revenue
is lost annually due to tax haven use
What is the Fair Tax Mark?
In 2014, the Fair Tax Mark was launched by the Fair Tax Foundation, offering accreditation for businesses who don’t use tax avoidance schemes and pay the right amount of corporate income tax.
Stephen says, “We are proud to have been one of the Pioneer businesses to achieve accreditation and we’ve just been re-accredited for the tenth year with a score of 19/20, which has improved from last year’s score of 15/20. To start with it was mainly co-ops coming on board, but now PLCs are joining. Accountants and auditors are now getting more comfortable with it and asking for more disclosures in the tax notes in the Annual Report.”
Why does paying a fair amount of tax matter?
Stephen explains, “As a business, it’s important for us to trade in an ethical way. We try to do business as fairly as possible and not take advantage of tax schemes or tax havens”
Paying the right amount of tax means more money for essential services, such as education and healthcare. “It’s about paying back into the system. The government uses those funds for the benefit of the rest of society.”
How does holding the Fair Tax Mark set us apart?
He says, “I think Fair Tax gained a bit more exposure during the financial crisis and even now with the cost-of-living crisis where you’re seeing, for example, large energy firms posting massive profits. People have started asking whether everyone is paying an equal share and following the same rules.
“As a Society, we try to be as transparent as possible with our accounting to tie into our value of openness. For example, we put a lot of extra disclosures into our Annual Report to explain how a tax charge or credit is built up and what the balances refer to, rather than just including a single figure that’s open to interpretation.”
To read our tax charter click here.
Has the move to Making Tax Digital helped with transparency?
Making Tax Digital (MTD) is a government initiative to help reduce the tax gap (the difference between theoretical tax liabilities and tax revenue received) by requiring businesses to keep digital records and submit updates every quarter.
Our Society has been transitioning over for the past few years in line with regulation and the final element, VAT, has now been moved over to the new MTD system.
Stephen concludes, “MTD has helped us remove minor errors that may have occurred before when moving data from one system to another and it’s meant we’ve also needed to review our processes.
We’ve always had an open and honest relationship with HMRC, so we have nothing to hide with the move to MTD. We’re always happy to provide them with any information they need.”
Find out more about Fair Tax Week and our re-accreditation.