TAUNTON-based tax expert Paul Aplin breaks down the talking points from the Paradise Papers scandal.

Paul is a tax partner with South West firm A.C.Mole and Sons, and is the deputy president of ICAEW (Institute of Chartered Accountants in England and Wales).

The revelations in the Paradise Papers dominated the news for days, and I have been following the story with interest.

It seems to me to split into three main elements: the way multi-national businesses arrange their affairs, tax avoidance schemes and transparency in financial arrangements.

I have been struck by the number of times I have heard journalists use the words “there is no suggestion of anything illegal”.

Transparency

Let’s take transparency first. People are free to invest their money wherever they wish, but hiding money for the purpose of evading tax is illegal.

More than 50 countries – including the UK - are now exchanging information about funds held for overseas residents automatically. The number of hiding places is shrinking by the day.

Multi-national businesses

Many multi-national companies arrange their affairs through structures that take advantage of the fact that some countries have lower tax rates than others.

The issue of “transfer pricing” – the price at which goods, services and rights are transferred between parts of an international business structure - has attracted the attention of the media, politicians and tax authorities regularly over recent years.

There has been a coordinated response by over 100 countries through the Organisation of Economic Co-Operation and Development’s Base Erosion and Profit Shifting project to address this complex issue.

The UK has also unilaterally introduced a Diverted Profits Tax aimed at the same target.

Tax avoidance schemes

The third element of the revelations covers tax avoidance. HMRC has overturned a number of tax “schemes” in the courts over recent years and now has a powerful arsenal of deterrent powers.

The ICAEW, CIOT and five other UK accountancy and tax representative bodies updated their guidance to members last year.

The guidance says that members must not create, encourage or promote tax planning arrangements or structures that set out to achieve results that are contrary to the clear intention of Parliament in enacting relevant legislation and/or are highly artificial or highly contrived and seek to exploit shortcomings within the relevant legislation.

Much is therefore already being done to tackle the issues highlighted by the BBC Panorama programme.

We have not however heard the last of any of this and more still needs to be done.