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Finance Bill

The hon. Gentleman makes a point about enforceability and about which person should be under an obligation, but of course a senior accounting officer will already have to sign off the tax returns when they are filed, a finance director will have to sign off the accounts, which include a calculation of the tax liability, and directors are responsible for maintaining proper accounting records. There may not be a specific obligation relating to tax accounting, but there are already broad responsibilities placed on directors to maintain proper accounting records. HMRC needs to justify why it is going beyond the existing tax and legal obligations on companies to provide proper tax accounting systems. That justification is missing. It is a question of HMRC trying to establish what the benefits and costs of enforceability that we are discussing. That is what is missing. I was about to comment on personal accountability. The measure imposes a fine of up to £5,000 on senior accounting officers for non-compliance. I suspect that any senior accounting officer would seek indemnity from their company, and would also look to their auditors. It is a slightly odd situation; the accounting officer will provide the certificate to the auditors, but he will also look to the auditors for compliance. There is an important point to make on the issue of materiality. I know from my experience as an auditor that one works to a "true and fair view". There is a concept of audit materiality in that, and it depends on the company to say where that threshold of materiality applies. It is not clear where it applies in the case that we are considering. Clearly, the fact that the Government introduced the proposal suggests that the level of materiality in company accounts is not sufficient; otherwise, they would not have needed to include the clause. They would have been content for the matter to rest where it is. I am not sure whether the Government are clear about where they believe that materiality should be. How much inaccuracy would HMRC be prepared to tolerate in the preparation of tax accounts?