Taxes are probably one the most debated topics in a welfare society. A number of businesses have been caught avoiding taxes here in the UK and this has caused plenty of outrage in the public. Fair tax is a concept developed to highlight that a company is doing its fair share by paying its taxes. In the UK, a fair tax mark initiative was launched to increase accountability and to ensure businesses are doing their bit.
As well as being a popular accreditation scheme in the UK that aims to highlight businesses that are transparent with their tax dealings, other countries are also looking into utilising a fair tax system.
If you look at recent newspaper reports, you’ll find plenty of stories about big businesses avoiding taxes in the UK. A number of companies use tax havens and artificial business structures to keep their taxes low or even avoid them altogether. The problem is that this doesn’t only lead to the country missing out on taxes, but it also distorts competition and can be devastating for small businesses trying to break into the market.
Furthermore, according to the TUC report, around £12 billion of tax revenue is lost each year. In the current tough economic climate, this is a lot of money lost and public’s disappointment in big corporations isn’t any wonder.
With the fair tax system, business won’t be required to pay more; they are only required to pay the taxes that law has set. Naturally then, the biggest things that the Fair Tax Mark system brings about are more fairness and transparency of the tax system.
According to the Fair Tax Mark website, the aim is to help improve the existing reporting that exists and is publicly accessible through and from places such as Companies House and the Financial Conduct Authority.
Of course, it is important to note there are many different types of businesses operating in the UK. But the idea is that a fair tax system would notice the different tax needs and cater for all of them. Therefore, a multi-national business would be required to highlight its tax commitments across the world.
The truth is that the biggest winners in a fair tax system are the public as well as the small businesses. According to a Tax Research report, small businesses are already doing their bit when it comes to paying taxes. The bigger the business, the less likely they are to pay the right amount of corporate taxes.
The good thing about the Fair Tax Mark system is that it doesn’t change taxation per se. The only difference is that the corporate playing field just becomes fairer for everyone, whether you are a small or a big business.
If you want to ensure your business is making the most out of taxes, then a good professional accountant can help. You can visit our tax resources for more information on different systems, such as VAT and corporate tax.