In a world where public finances are under intense pressure, it is often tempting for politicians to shy away from the hard choices when it comes to making policy.
So it was interesting to read shadow chancellor John McDonnell’s speech at the World Economic Forum in Davos, especially the part where he proposed new initiatives that would (he claimed) require accountants to act “to the highest ethical standards”.
For chartered accountants, this has been the central pillar of our profession since we were granted our Royal Charter nearly 140 years ago.
There is no need for a “Hippocratic Oath” specifically in relation to tax, as McDonnell called for, since chartered accountants already ensure that taxpayers – individuals, companies, and others – pay the right amount of tax due under the law. In this way, we help reduce the tax gap by supporting good tax compliance.
Of course, it would be naive to hope anyone would take this purely on trust. Which is why, in addition to being subject to legal requirements, chartered accountants and members of other professional accountancy bodies are also required to follow a professional code of ethics.
This includes guidance for Professional Conduct in Relation to Tax – endorsed by HMRC – which sets out the high ethical standards that underpin the tripartite relationship between tax adviser, client, and HMRC.
This code, which enshrines fundamental principles like integrity and objectivity, is regularly updated to reflect changes both to the law and the expectations of society.
But this is not all. The ICAEW has been saying for years that there is no place in our profession for anyone involved in the creation or promotion of artificial, contrived or aggressive tax avoidance schemes.
We require our members to demonstrate the value of chartered accountancy by acting at all times to the highest ethical, professional and technical standards – every member is an ambassador for all. Where we have been made aware of members falling short of this, we investigate, and, where necessary, take action.
It is, however, worth examining why such schemes can exist at all. They are possible because the UK tax system is one of the most complex in the world.
Our tax code is over 10m words long – 12 times the length of the King James Bible. That it works at all is thanks to our members, their ethics, and the responsibilities they shoulder as stewards of public finance.
It is fitting that McDonnell drew comparisons with the medical profession.
A successful medical profession does not, after all, focus purely on fixing what is wrong, but also on helping people maintain a healthy body in the first place. And that is precisely what chartered accountants do for the body corporate. Our members advise over two million businesses, helping them grow, develop, export, access finance – all of the things they need to do in order to generate the profits on which they pay taxes.
But what is rarely mentioned is that almost a third of registered tax advisers are not members of any professional body. This means they are not required to follow any ethical or professional standards at all. If politicians truly wish to get tough and raise standards, ensuring that the high bar set by the chartered profession is applied across the board would be a good start.
It is a common misconception that the original Hippocratic Oath contains the phrase “first do no harm”, which actually originated in the seventeenth century. But it is a good rule to live by.
I applaud McDonnell for wanting to deliver a fairer, more, equitable, more prosperous society. He could start by rooting out the wrong, not attacking those who have been working hard to do what is right.