The likely reputational damage attendant on its alleged tax avoidance dawned on Starbucks last week. On Saturday, the coffee chain announced it is reviewing its tax approach to Britain, ahead of a scathing report from the Public Accounts Committee accusing household-name multinationals of ‘immoral’ use of various schemes to minimise the tax they pay on UK profits.
The tenor of this debate has shifted significantly: from what is ‘legal’ to what is ‘moral’. And if it is no longer enough to say ‘our clients are not doing anything illegal’, accountants, and to a lesser degree lawyers, may face their own reputational reckoning.
How so? Well, the public gaze is certain to turn upon those who actually facilitate the schemes which businesses use to minimise their tax liabilities. Indeed Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales (ICAEW), was recently moved to stress that the UK’s largest accountancy firms are not involved in promoting ‘artificial’ tax avoidance.
PAC chair Margaret Hodge is proving an indefatigable campaigner in this regard. ‘Corporate responsibility doesn’t appear to apply to tax,’ she told an ICAEW conference. ‘I wish it did.’
Not yet, perhaps. Until it does, are the CSR policies of multinationals – and those of their advisers come to that – actually worth the paper they are written on? Ms Hodge would have a ready answer.