According to the Institute of Business Ethics, corporate tax avoidance is now public enemy number one. In its most recent annual survey (2013) on attitudes towards corporate responsibility, the IBE found the public now ranked corporate tax avoidance above human rights, ecological degradation and sweatshops as the issue in most need of addressing.
Charities, like the British public, have a particular right to feel aggrieved by this complex form of corporate behaviour. Some of the high profile organisations exposed for avoiding their tax obligations so far have been those same companies loudly reporting all the work they do for good causes in the name of “corporate social responsibility”.
And in spite of the improving signals for the UK economy laid out in the 2014 Budget, no one would have missed the Chancellor’s statement that reminded us that the structural deficit programme is far from complete.
According to NCVO, this commitment to balancing the books will hit UK charities hard. The UK voluntary sector is estimated to lose around £1.2bn in public funding a year by 2015/16, a fall of 9.4 per cent. Cumulatively, the sector stands to lose £3.3bn over the spending review period.
Meanwhile, according to HMRC figures, the difference between the amount of tax that should have been paid by corporations (including VAT and Corporation Tax) against what was actually collected in 2011/12 alone, stood at an eye-watering £4bn. Such figures demonstrate why tax has rapidly become an issue of corporate responsibility.
Until recently it had been all but impossible to distinguish between companies with a responsible and irresponsible approach to tax. It was in this context that a new initiative was launched earlier this year to help companies give the assurances their customers increasingly want. The Fair Tax Mark is the world’s first independent accreditation scheme to address the issue of responsible tax.
Developed by a team of tax experts, campaigners and specialists in corporate social responsibility, the mark certifies that a company is making concerted efforts to be transparent about its tax affairs and pay the right amount of corporation tax at the right time and in the right place.
Initially, the mark will be focussing on recruiting small and medium sized businesses into its ranks, but is due to open eligibility for multinational companies later this year. The likes of the Phone Coop, Midcounties Co-operative and the company I work for, Unity Trust Bank, have all signed up as pioneers.
Charities have long been at the vanguard of developing methods to ensure their values and missions are not undermined by the operational reality of running their organisations. In the same way that a health charity would disinvest any interest in a tobacco company, the entire third sector has a vested interest in asking any company it does business with questions about tax.
Peter Kelly is business development and marketing director at Unity Trust Bank