We recognise that tax is a fundamental part of our world. Without it modern economies could not function and we would not be able to achieve the collective goods of health and welfare, security and education which we all value. It is also a subject where, on a daily basis, we as a society face the boundaries between the rights and duties of the individual which we owe to each other and the obligations of the state. As tax advisors it is our purpose to help ensure that these boundaries are drawn in the right place; helping taxpayers (both individuals and corporates) on the one hand to live up to their duty to comply with tax rules whilst representing their interests in a way which encourages the state to develop good tax law and administer the rules in ways which are conducive to this common good.

Responsible tax for the common good: Sustainable outcomes that contribute to the overall benefit of society.

This approach flows from our KPMG Values and our Global Principles for a Responsible Tax Practice which supplement the guidance of the professional bodies by which we are governed [1].

Society needs to be able to trust that experts will operate in a responsible way, not just individually but collectively, whether they be experts within companies, those who advise them or those who create and administer the tax system. If these experts do not work together in what is and is perceived to be the equitable interests of society as a whole the end result is likely to be a sub-optimal tax system with increased costs for taxpayers which are then passed on indirectly to society at large.

Tax advisers have a critical role to play in ensuring the tax system operates in a proper manner, helping governments achieve policy objectives in a fair and efficient way and, at the same time, protecting the interests of taxpayers and helping them meet their compliance obligations in an increasingly complex tax world.

Tax professionals must recognise the consequences of not playing their full part in creating a fair and efficient tax system: this necessarily includes encouraging clients, tax authorities and legislators to recognise and be responsive to the implications of any perceived abuse of the tax system.

We recognise the desirability of the tax system supporting rather than hindering economic growth; the right of governments to raise tax for the good of society; the rights of taxpayers to manage their tax liabilities; the need for fairness between taxpayers (in terms of ability to pay, equality of treatment and application of the rules); and the potential tensions between these principles that we all need to negotiate.

Determining tax policy is the responsibility of governments and creating the rules that implement that tax policy is a matter for legislators. However, governments and lawmakers do not operate in isolation.

Governments should consider the long term welfare created by tax policy over short term political gain. Governments have the right to set rules which are appropriate to their domestic economies but in the international tax environment they should consider the impact of tax policy globally and not engage in unfair tax competition.

KPMG will provide open and transparent assistance to governments and revenue authorities on how policy proposals can be achieved, whether they are likely to deliver their aims in an effective manner, and what unintended consequences could arise from changes.

We believe that there is a moral aspect to taxation. But the quantum of tax payable must be determined by the application of the law and to replace that with an abstract “morally right” amount of tax would undermine the legitimacy of the rule of law. The amount of tax payable, however, is also determined by choices made by both governments (on policy) and taxpayers (on planning) and such choices carry ethical implications (such as the impact on all stakeholders and society as a whole) which we believe should be taken into consideration. We recognise there will be differing views on what constitutes acceptable choices.

It is for our clients to decide what they consider appropriate in terms of tax planning. In particular we recognise their right to manage their tax affairs efficiently. As well as providing technical advice, we will advise on our view on the acceptability of any planning and on the risks we foresee to the tax system including the potential consequences of subsequent changes to the tax system, in response to the planning.

The advice that we give to clients is governed by our Global Principles for a Responsible Tax Practice which are regularly reviewed to ensure they remain appropriate and reflect the society in which we operate.  We will not promote or recommend planning that breaches these principles. If asked, we will provide technical advice on such planning but we will make clear our stance and we would not assist a client in implementing the planning.

We believe in an open and transparent relationship between taxpayers, advisers and tax authorities. This mutual trust and respect is needed to ensure the tax system operates properly and appropriately.

We will work openly and constructively with HMRC (and other tax authorities) to ensure they can do their job of administering tax effectively. At the same time we will firmly represent our clients’ interests, challenging tax authorities when their conduct risks undermining the fairness or effectiveness of the tax system.

[1] The Professional Conduct in Relation to Taxation explains how tax professionals should behave in their dealings with taxpayers and the authorities. The guide is jointly prepared by the professional bodies including the Institute of Chartered Accountants in England and Wales (ICAEW), the Institute of Chartered Accountants of Scotland (ICAS) and the Chartered Institute of Taxation (CIOT); and is guidance that KPMG strictly adheres to.