SSE recently became the first FTSE 100 company to be accredited with the Fair Tax Mark, the world’s first independent assessment process for identifying companies making a genuine effort to be open and transparent about their tax affairs.
Some have characterised this as ‘brave’ and ‘bold’ but for SSE it was the next logical step in helping people see our commitment to being a responsible taxpayer.
SSE’s starting point on tax is the recognition that, as a provider of an essential service that every member of society depends on, we have a responsibility to contribute to the societies in which we operate. Ensuring we are transparent about the tax we pay and improving our tax disclosures to make them easier to understand, is therefore something we have focused hard on in recent years.
But what has become increasingly clear, is that transparency on our numbers is not the whole answer.
There is no doubt that there is widespread consumer unease about the way some large companies manage their tax affairs. I believe this is, in part, driven by a sense that companies are not playing fair in the approach they take to managing their tax affairs and are not transparent about the principles that underpin their approach.
SSE has tried to strike the right balance, in providing analysis and commentary as to how the tax charges in our accounts are arrived at, and what factors impact upon them. That detailed analysis, however, only goes part way towards confirming whether the amount of tax payable on our profits seems to be “fair”.
What is more important when making that arguably quite subjective assessment, is understanding SSE’s attitude to tax. That is enshrined in SSE’s tax policy, which cuts to the heart of assessing what kind of a taxpayer SSE actually is, and is why we decided to publish it in full.
SSE’s tax policy makes clear we are proud to pay our fair share of tax. It states that, while we claim allowances and reliefs which are available to us, we do not use tax havens or artificial tax avoidance schemes to reduce our tax charges, and do not take an aggressive stance in our interpretation of tax legislation. We also look to comply with not only the letter of the law, but also the spirit of the law, and to maintain a good relationship with HMRC. Responsibility for that policy sits at the very highest levels within the company, illustrating just how seriously we take being a responsible taxpayer.
We had, however, been looking for the final piece in the jigsaw. We judged that consumers are unlikely to ever be entirely reassured by the claims that companies make themselves. They want an independent third party to provide this reassurance. That is why SSE sought to work with the Fair Tax Mark.
The Fair Tax mark accreditation has certainly helped us raise our standards and provided the credible third part accreditation we were looking for. We hope others will join us and, through it, rebuild public trust on the tax companies pay.
Through the combination of detailed, user friendly analysis; clear statements regarding SSE’s attitude in relation to tax; and then external Fair Tax Mark accreditation, we are confident that anyone can assess how the tax payable on our profits is arrived at and what factors impact upon it. More importantly, we hope people can be satisfied that our approach to paying tax is fair and, as a result, be confident we are a responsible taxpayer.
Martin McEwen is the Head of Tax at SSE, having worked at the company for 6 years. Prior to joining SSE, Martin worked in public practice with PwC.