Tax communications should be accurate, clear and relevant. They should use plain-language that non-experts can understand, explaining the context for any differences from the norm. They should show the big picture and create value by building public trust.
Over the last eleven years, since the first Building Public Trust Awards for tax reporting, we have seen a substantial change in the approach of businesses and governments towards the public reporting of tax. In many cases, tax is no longer considered to be a private matter for companies, but is increasingly viewed as a measure of a company’s contribution to the communities in which it operates and as a reflection of a business’s broader values and purpose. It could therefore be argued that governments are using transparency to square the circle of reducing corporate income tax rates to attract investment and growth, while being able to demonstrate to their electorates that companies are paying their “fair share” and contributing to the communities in which they operate.
It is against this backdrop that we present this insight into voluntary tax reporting for accounting periods ending in the year to 31 March 2016. We summarise the background to the mandatory requirements for tax transparency and then provide examples of how companies are responding, using voluntary tax disclosures to tell their story. As always, there is a range of approaches and it’s important to consider the value that increased transparency will bring. For some companies, where the business case is insufficient, there will be little activity in this area. Others however have dedicated time and energy to developing voluntary disclosures and driving the debate on tax transparency forwards and we salute their efforts.
Our latest review gives insight into the tax reporting of all the companies in the FTSE350. We have included extracts of the leaders in tax reporting.