A study of the changing relationship between large corporates and the Inland Revenue

Abstract

This thesis addresses the following research questions: 1. How is the process of corporate tax compliance changing for large groups of companies? 2. How is this process being managed by the Inland Revenue? The empirical evidence consists of 33 interviews conducted in 2002-04 with IR officials; tax directors and tax managers of large corporates; and tax partners from a Big 4 accounting firm. This· thesis also draws upon archival data including state papers and documentary data from the IR. Theoretically this thesis draws from the new public management, administration, and the tax compliance literatures. However I argue that an approach grounded purely i!1 these literatures does not adequately explain the changing tax compliance environment for large groups. Therefore I utilise other literatures which draw 'on Foucault's work on multiple expertise constructing subjects engaging with disciplinary knowledge and power, to assist in filling this gap. Against a backdrop where new organisational structures and processes are shifting a once bureaucratic Inland Revenue to a more strategic and marketing-based organisation, the corporate tax compliance process for large corporates has changed. Where the process was previously a long (in terms of time scale), formal and distant relationship with the IR carried out principally in writing, it has, while retaining aspects of this past, shifted towards being a mixture of the written and the oral, generating a more incll;lSive dialogue with the taxpayer, frequently in the form of meetings based on targeted yet potentially open-ended questioning. This has opened up what is described here as a new kind of 'truth game', which is less one based on inquisitorial practices but more based on examination techniques, played by knowledge experts: the IR official and the corporate taxpayer. Drawing on a governmentality framework as articulated by Foucault and his latter works, I argue that the nature of the corporate tax compliance game resembles a truth game between two kinds of subject generated in this transdisciplinary world: the new shape tax official and the visible customer (the taxpayer). The IR official - the lIM Inspector of Taxes, has been remoulded from one type of knowledge expert to another, which is a 3 dimensional transdisciplinary T shaped tax official. This is a tax official who both has the detailed deep technical knowledge as a knowledge expert but also has to relate, in a broader sense, to the new way of operating in a strategic and marketing organisation. The emergence of the corporate taxpayer as a visible customer has changed the process of corporate tax compliance for large corporates whereby they exercise certain power in the relationship by virtue ofthis visibility. This research tracks a new kind of interaction of the interplay between subjectivization and objectivization which seems to have become established and develops a theoretically informed way of looking at emergent governmental and more wide ranging forms of application.