Michael Izza, chief executive of the Institute of Chartered Accountants has criticised accountants that promote ‘aggressive’ tax avoidance schemes, such as Jimmy Carr’s K2 tax avoidance scheme.
Chief executive to the largest accountancy body in the UK, Michael Izza, has aired his views on his personal blog on the issue of accountants promoting ‘aggressive’ tax avoidance schemes to their clients, in a post titled ‘Aggressive tax avoidance – my view’.
The head of the Institute of Chartered Accountants in England and Wales (ICAEW) disagrees with extreme tax avoidance measures to reduce one’s tax liability, including the Jersey based K2 tax avoidance scheme used by many Brits and comedian Jimmy Carr.Head of the ICAEW disagrees with ‘aggressive’ tax avoidance
“I believe that there is no room in our profession in the creation or maintenance of these sorts of tax schemes,” Izza writes on his blog.
Izza argues that the public now see past the excuse for ‘aggressive’ measures that tax avoidance is perfectly legal and that accountants should stop promoting tax avoidance loopholes that have been set up artificially, for the sole purpose of avoiding tax.
Izza argues that members of the accountancy body (ICAEW) promoting such tax avoidance schemes and ‘aggressive tax planning’ to clients are: “risking the reputation of the vast majority of our members who provide valuable and honest support to businesses and individuals and who want nothing to do with such schemes”.
Izza even asks ICAEW Chartered Accountants promoting ‘aggressive’ tax avoidance schemes to: “look at themselves in the mirror and ask – am I upholding the honour and reputation of ICAEW Chartered Accountants and am I seen to be doing that? If the answer is no then they need to ask themselves whether they want to belong to our profession or not? “
Claiming that the public fail to ‘condone’ and ‘appreciate’ the difference between tax avoidance and tax evasion; tax avoidance is the legal restructuring of affairs to reduce your tax liabilities, and tax evasion is the deliberate failure to inform HMRC of income or pay tax due; Izza said that taxpayers need to be reassured, more than ever before, that their tax affairs are being dealt with by their accountant in a ‘professional’ and ‘responsible’ way.
“ICAEW Chartered Accountants should be trusted to abide by our Code of Ethics and in the coming weeks we will be looking at what more can be done to reinforce that trust”, he added.
Not all ICAEW accountants have received Izza’s blog post – ‘Aggressive tax avoidance – my view’ – in a positive light. Comments on his blog include:
“Avoidance is a perfectly normal human thing to try to do, the politicians and media are not in a position to lecture the rest of us on ‘morality’. The media and politicians lecturing us on morality is as natural as a cat walking on its hind legs.” Ken Frost on 29 June 2012.
“I just cannot believe that the head of a once highly respected professional institute should have written such a blatantly stupid blog. Michael appears to have accepted that the drivel written and published in the Times and repeated in other newspapers is factually correct. Has Michael gone to the trouble of ascertaining the true facts? I very much doubt it and he has therefore been unwittingly drawn into a political game of intimidation being played out by HMRC and publicity seeking politicians. The boundaries between evasion and avoidance appear to have been deliberately blurred for the sake of pious self righteousness.” Peter Cox on 03 July 2012
“I have to side with the dissenters on this one – I see no problem ethical or otherwise in making clients aware of any legal routes to reducing their tax liabilities. With available schemes the client has a clear choice as to how much tax they pay and they can use their own moral judgement to decide on what that is – it is not for me to judge them.” Shaun Philpott on 04 July 2012
“I think that Mr Izza needs to answer some questions if he is to remain a credible chief executive of my Institute after having made such a post.” Peter Horsman on 17 July 2012.
The Institute of Chartered Accountants in England and Wales (ICAEW) has said that no disciplinary action has been taken in the last three years concerning members engaged in ‘aggressive’ tax avoidance, as no complaints have been raised in that time.