Model tax policy notes
It is now becoming relatively commonplace for companies to include a statement on their tax policy in their directors’ report in the annual financial statements. This is, no doubt, at least in part due to activist campaigning pressure. The tone of these notes varies considerably. Some are defensive e.g.: “we do not use marketed tax avoidance products” or “we do not use tax havens to undertake artificial tax planning”. Some are mildly conformational such as “we seek to maintain good relationships with all tax authorities with whom we deal”, which appears to mean remarkably little in practice. Others are positively aspirational: “we seek to pay the right amount of tax in the right place at the right time in accordance with both the spirit and letter of the law in all jurisdictions in which we operate”.
Our aim is to encourage companies to have specific and aspirational tax policies, as far as possible. So, for example, we think that the following templates embrace much of what we would like to see a company say.
Model current and deferred tax notes and reconciliation
This template shows the information required for a company to fully explain its tax. Using figures from a made up company, it offers model tax notes and a reconciliation that can be followed by any SME. The notes have been saved in MS Excel format for ease-of-use by accountants and others preparing accounts.