September 28, 2016
John Kingsley considers the strange parallels between the worlds of Tax Avoidance and professional sport …
In the past few days there has been intense public scrutiny of the previously obscure subject of “Therapeutic Use Exemptions” (so-called TUEs) claimed by elite level athletes. Whilst the athletes’ confidential medical records have been obtained unlawfully by a group with its own agenda, the details have been seized upon by journalists and circulated via social media channels, creating another storm of sporting controversy.
Professional cycling has been at the eye of this storm and the nation’s most famous cyclist has effectively been forced to make a public defence of his own conduct, fully supported by his team. All the athletes in the spotlight have tended to emphasise that no rules have been broken and that all the procedural requirements laid down by the relevant sport’s governing body have been followed to the letter.
The mainstream media coverage has also highlighted that no rules have been broken. However, all these robust rebuttals have not prevented a stream of questions about the TUEs claimed, including questions on their timing, frequency of use and the athletes’ underlying medical conditions. One high profile investigative journalist commented that “it looks bad”, which was undoubtedly a view shared by many others.
Reflecting on the issues described above, there are some striking parallels with the views expressed in the ongoing public debate around Tax Avoidance (Tax Evasion is a different kettle of fish entirely).
The well rehearsed defence that “the tax arrangements were all perfectly legal at the time” now appears to fall on deaf ears. Certainly there is little or no public sympathy for users of packaged Tax Schemes, even where they are supported by professional advice and legal documentation, enabling the Scheme Promoters to claim that the underlying arrangements are both lawful and procedurally sound.
As a business owner, what insights can I take away from this episode?
For business owners, the relevance is that any public perception of Tax Avoidance (and unfortunately this isn’t confined to the use of packaged Tax Schemes ) could be thoroughly bad news, as the “perfectly legal” defence is no longer capable of preventing a potential PR disaster. It’s also worth noting that information regarding taxpayers’ affairs, which might have been assumed to be confidential, is now reaching the public domain through a variety of different routes.
Perhaps the real downside is the prospect of lasting reputational damage to the business, which is something that needs to be on, if not top of, the list of key management considerations when it comes to tax planning. Whilst the tone of the current debate does have a tendency to veer towards the hysterical, the public mood simply cannot be ignored by taxpayers or their advisers. Times have changed indeed.
As a brief footnote, the media controversy over TUEs was overtaken a couple days later by the sudden and unexpected departure of the England Football Manager….