Panel of International Academic Tax Expertise on Business

Summary of minutes of 9 December 2008 meeting, 100 Parliament Street, London, 11.30 - 14.30

Attendees:

John Tiley (Chair) University of Cambridge
John Hasseldine - University of Nottingham
Judith Freedman - University of Oxford
Michael Devereux - Oxford University Centre for Business Taxation
Jim Hines - University of Michigan
Chris Evans - University of South Wales, Australia

John Connors - 100 Group
Mervyn Woods - CBI

Dave Hartnett - Permanent Secretary for Tax
Partho Shome - HM Revenue & Customs (HMRC) Chief Economist
Iain McNeill - HMRC
Ian Valentine - HMRC
Nicole Kett (part) - HM Treasury (HMT)
Huw Stephens - HMT
Judith Knott - HMRC
Kate Ramm - HMRC
Brigit Bracco - HMRC

Apologies:

Peter Essers - Tilburg University Netherlands
Peter Melz - University of Stockholm
Joel Walters - 100 Group
Ian Brimicombe - 100 Group
Paul Morton - 100 Group

Welcome and introduction

1. Professor John Tiley (JT) welcomed the panel and introduced the Risk Assessment theme. Minutes of the previous meeting and revised terms of reference were agreed.

OECD Banks study

2. Iain McNeill (IM) provided a general overview of the current OECD Banks study due for completion by 31 March 2009.

Organisational changes

3. Dave Harnett (DH) provided an overview of the recent HMRC Board level changes and his new role as Permanent Secretary for Tax.

Risk assessment

4. Professor Judith Freedman (JF) introduced her paper ‘Research on Risk Rating Approach to managing the relationship between revenue authorities and large corporate taxpayers’.

5. At the first meeting, the panel agreed that the next meeting should focus on risk analysis. The members agreed to explore relevant academic work undertaken on this issue. A number of potential research areas arose as a result of the literature review. The summary paper suggested exploring the following themes:

  • Can a consensus be reached on the meaning of aggressive tax planning and the extent to which it should be dealt with through enhanced co-operation with business?
  • How does risk management relate to resource allocation by revenue authorities more generally?
  • To what extent can enhanced cooperation result in better real - time working, focus on material issues and simplification?
  • To what extent can certainty be increased through enhanced cooperation?
  • How valuable is enhanced cooperation to corporate taxpayers? Could anything be done to make that more valuable?
  • Are the staff of revenue authorities adequately trained for the enhanced co-operation role?
  • How well does bringing tax into the boardroom work as a mechanism for changing the compliance culture.
  • Transparency of risk rating.

6. To supplement the themes raised in the paper, experience of risk assessment in the jurisdictions represented on the panel were discussed.

7. US - Compliance Assurance Program (CAP) was introduced as a form of enhanced cooperation. However, the results from the initiative are mixed.

8. Australia - The Annual Compliance Arrangements (ACA) process was introduced in 2008 and provides practical certainty subject to full and true disclosure of all relevant and material facts. It is only available to the top 50 largest companies but initial reviews suggest that it is working well.

9. Netherlands - has a very advanced enhanced co-operation process, referred to as ‘horizontal monitoring’. This entails mutual trust between the taxpayer and the Tax and Customs Administration and clearer communication about each other’s responsibilities and capabilities in order to meet obligations, as well as laying down and observing reciprocal agreements.

10. In summary the research highlighted scope for further work. In particular the academic members recommended the usefulness of a comparative study to establish best practice.

Next meeting and actions

11. Agenda items suggested for the next meeting were as follows:

  • Role of litigation – How this might change during economic cycles.
  • Relationship of tax and financial crisis.
  • Resolution of issues.

12. The panel would consider these (in relation to any work they were aware of or had been involved in) and propose specific focus for the next meeting.

13. The panel agreed to meet again in July 2009.