Beyond Boundaries: Developing Approaches to Tax Avoidance and Tax Risk Management

Research Highlight 2007

Tax administration and design

The broad aim of this project is to establish more precisely where common understanding of the nature of tax avoidance exists and where it does not, what creates differences in views and what might be the barriers to achieving agreement. This broad aim links closely to concerns about the relationship between large businesses and HMRC which led to the government’s 2006 Review of Links with Large Business (the ‘Varney Report’) and the papers that followed it in March 2007 (the ‘Varney Delivery Plan’).

As part of our research in this area, we conducted a pilot project to survey various stakeholder groups. To make progress in identifying “avoidance”, or “acceptable” or “unacceptable” behaviour, interviewees were presented with detailed examples of various types of arrangement ranging from the purely circular to those facilitating the efficient conduct of purely commercial transactions. Interviewees were questioned about the decisions and recommendations they would make about these transactions. HMRC officials were asked about their response to such arrangements. A majority of our interviewees raised serious questions about the detail and practical operation of the Varney Delivery Plan, and especially the element of risk rating.

“Moving Beyond Avoidance? Tax Risk and the Relationship Between Large Business and HMRC”, Judith Freedman, Geoffrey Loomer and John Vella, Centre Report 2.