Is the UK tax system ethical?

A spate of high profile tax cases has highlighted the fact that the UK tax system is both complex and burdensome. But can it claim to be ethical? Three AAT members in practice (MIP) weigh up the arguments.

Dawn Clarkson FMAAT: Yes

For smaller businesses the UK tax system is ethical and fair.

It encourages businesses to grow. They have the opportunity to take advantage of tax reliefs and in particular the Regional Employer National Insurance Contributions Holiday for New Businesses. This in turn encourages employers to employ more people, which helps the national economy.

For larger companies, on the other hand, I think the system tolerates them taking advantage of loopholes that are unethical in themselves. Moving offshore to tax havens allows them to reduce company profits in the UK and end up paying less tax here. That is of course not ethical.

Jenni Frost MAAT: No

Why? I’m actually more concerned with morals than ethics, and I definitely don’t think the UK tax system is moral.

But in many ways it’s also not ethical. In the course of what I do, I see people on low incomes and I have to give them the bad news that they owe tax.

For some, this will mean they struggle to live of what they’ve got left. That in and of itself is not unethical. But it become unethical when large corporations are let off tax because they know how to wine and dine the right people, and who to give the sweet talk to.

This is really a slap in the face to the little people who don’t have the means to do this and who struggle to make ends meet every day. That’s unfair and unethical.

Henry Cooper FMAAT: Maybe

The answer to this question depends on your outlook.

We hear about big companies, such as Starbucks, avoiding tax. Is that okay? From an ethical point of view, probably not, but legally, the answer is not that clear. At the same time, recent technological developments and the prevalence of social media has resulted in a type of consumer democracy that can have positive as well as negative implications from an ethical point of view.

As we saw in this case, consumers are putting pressure on companies to think beyond the legal aspects of what they’re doing. In some ways, this is a positive thing, but it can also be problematic that social media is deciding how the UK tax system should be run, by swaying public opinion.

There may be cause for evaluating if the system is ethical when it allows big companies to act like this, but there can also be ethical issues associated with allowing consumers unregulated power of influence over the tax system.

For more information on ethics in accounting, visit the AAT Ethics website.

AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.