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Law firm says no legal duty for tax avoidance

Businesses in the UK shouldn’t be getting away with engaging in strategies to avoid tax by stating they are looking for the optimum return for shareholders, says law company Farrer & Co.

After it was commissioned to investigate the Tax Justice Network, the company is ready to distribute a legal assessment among business heads, warning that they are unable to state they have a fiduciary duty in avoiding tax to benefit shareholders.

Based on this assessment, companies that have previously been willing to engage in tax avoidance should re-evaluate how their accountant in Eastham, or elsewhere in the UK, is instructed to deal with the books.

A Farrer & Co spokesperson said:

“It is not possible to construe a director’s duty to promote the success of the company as constituting a positive duty to avoid tax.”

In the statement, the firm went on to say that directors have some discretion when it comes to any social effects their decisions have. Furthermore, they can responsibly pay taxes as opposed to implementing complex structures which will see them receive protection from relevant law.

Numerous firms and advisors have made the point that they are responsible for lowering costs to shareholders, which includes tax.

The Tax Justice Network will send the assessment to FTSE 100 bosses.

Executives at board-level often receive reward packages based on performance, and these can be directly affected by how much tax is paid by the company throughout the year.

Posted by Louise
September 18, 2013

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