Richard Fearon: Tax transparency beats being seen through

Leeds Building Society has received national recognition over its approach towards tax.
Leeds Building Society has received national recognition over its approach towards tax.
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AWARDS are welcome but often it’s the means rather than the end that’s important. So being the first national High Street financial institution to secure the Fair Tax Mark is something we’re celebrating – although paying our fair share of tax is nothing new for us.

There was a time when headlines about tax might be regarded as a bit dull. But after some of the world’s biggest brands have come under fire for how much – or how little – tax they pay, the issue is now top of the news agenda.

Richard Fearon is chief executive of Leeds Building Society.

Richard Fearon is chief executive of Leeds Building Society.

In fact, time and again, tax transparency in the corporate world comes up as the public’s number one concern about how businesses conduct themselves.

Global mega-brands have discovered this strength of feeling when their tax affairs come under the spotlight and consumers will vote with their feet if they disapprove of how a business operates. Corporate behaviour judged as unethical can lead to lasting reputational damage.

Similarly, a prospective employer’s corporate responsibility policy is now a key consideration for many jobseekers, who might decide they’re not a good match if they feel that business comes up short.

So for all those reasons, achieving independent, external validation that we pay our fair share of tax was really important.

As a national financial services provider, consumer trust is essential to Leeds Building Society. But it means even more than that to us – paying our taxes is one of the principal ways we contribute to society.

Tax funds the vital public services our members and colleagues all rely on so, as a successful and profitable business, paying our way is important – something our members have highlighted as a priority for them too.

As a mutual, we’re owned by our members and run in their best interests so taking note of what matters to them has been at the heart of our business for more than 140 years. Paying our fair share of tax forms part of the society’s wider responsible business commitment to do what’s right for our members, colleagues and communities.

We set ourselves a number of stretching corporate responsibility targets to achieve between 2017 and 2020, including helping 30,000 first-time buyers into a home of their own, donating over £1.2m to charities and good causes, and investing over 8,000 volunteering hours.

We’ve made good progress against these targets and we’ve pledged to continue to work with Fair Tax to further improve our tax transparency.

Businesses which conduct their tax-related activities accurately and professionally will already be taking a lot of the steps needed towards achieving the Fair Tax Mark, such as declaring profits in the jurisdiction where their economic substance arises and clearly reporting their tax position in annual accounts.

Our commitments include not maintaining any connections to tax havens other than for legitimate trading purposes and we’ve worked with relevant authorities, such as HMRC, to ensure our tax affairs comply with the spirit, as well as the letter, of the law.

A strong positive culture in business is about doing the right thing when no-one is looking and we’d encourage other businesses who play fair on tax to work with Fair Tax to make sure they can take credit for doing the right thing.

My advice is this:

Listen to the public: In 2016 our members told us being transparent in how we do business was really important.

Be open to feedback: We asked Fair Tax to understand what we needed to do – we’d always paid our tax in the spirit of the law but its advice on how we could be more open led to one of our first actions, publishing our tax strategy on our website.

Get teams working together: Our board of directors was committed from the start and our finance and corporate responsibility teams worked together to make our tax reporting clearer.

Plan ahead: The process isn’t onerous but asks questions businesses may not have front and centre in their planning. We started building changes into our report and accounts process in anticipation of applying for the Fair Tax Mark.

Be brave: Tax avoidance has shown itself to have a damaging impact on trust in business. So, now more than ever, it’s important for those who are proud to pay their tax to come forward and be brave.

Richard Fearon is deputy chief executive of Leeds Building Society.