Tax and reputation: Why high-profile tax stories matter – Matthew Gilleard writes for PRWeek

Economic downturn brings the divisive issue of taxation into the theatre of public debate once more, but what does the tale of the former Chancellor and the former Magic Circle tax lawyer tell us about the link between tax and reputation?

Legality vs morality of tax

The stage is set. In the blue corner, a former UK Chancellor of the Exchequer turned Conservative Party Chairman. In the red, a former Magic Circle tax lawyer turned policy analyst and blogger. Watching on ringside, HMRC. Special guest referee: the British public.

Of course, this is both over-dramatised and over-simplified. But that is what tends to happen when very complex issues find themselves on the front pages. This was always more of a saga than a fight, per se, and one of many phases. Indeed Dan Neidle, a former law firm Head of Tax, founded Tax Policy Associates not to pick fights with Nadhim Zahawi or other high-profile figures, but to provide policymakers with expert, impartial tax policy advice and to improve public understanding of tax.

The latter is difficult, particularly as tax is one of those issues that comes with both legal and moral strings attached. Neither set is easily untangled. But while a complex tax code and a moral minefield may prevent greater public awareness of taxation, its grasp of other concepts – such as fairness or hypocrisy – is much stronger. When these topics come into play, interest piques and awareness peaks.

Untangling tax for reputation management

Taxation is typically the preserve of technical specialists. It is seen as complicated, un-interesting and un-glamorous. And for the most part, that is where it remains. As the economy bubbles along, nobody cares much for stories about tax. So they tend not to get written. However, Infinite Global research shows that when things are less rosy, and pockets feel the pinch, there is a discernible uptick in media coverage and, by extension, public scrutiny.

Amid such scrutiny, high-profile examples are used to connect theory and reality. For those in the spotlight, like Zahawi, a simple and transparent approach to communicating around tax is vital. Clarity and consistency of message must shine through above all else. If the scrutinised can explain, inform and justify, the media story will run dry. But failing to do so will build mistrust and cement their position as the media’s poster child for ‘wrongdoing’. Of course, the public position held by a high-profile or high net worth individual – as well as their pre-existing reputation or ‘track record’ – will determine the extent of the bloody nose they can conceivably suffer without facing reputational ruin.

Ultimately, it was more than a bloody nose for Zahawi as Prime Minister Rishi Sunak relieved him of his post, the gladiatorial thumb publicly turned following an investigation led by ethics adviser Sir Laurie Magnus.

All of which goes to show that tax matters.

Why good PR is important

While it may be a backburner issue when times are good, the Zahawi affair shows that there is no expiration date or statute of limitations when it comes to integrity – the story traces all the way back to 2000 when YouGov was founded. Reputational demise or decay can and will be backdated. How far depends on the nature of the mis-step and the scale of the perceived injustice.

This must serve as a cautionary tale, then, for those companies and individuals that hold lofty positions in public life. The bigger they come, the harder they fall. If your affairs aren’t ordered, your dismissal might well be.

To find out more, read the recent article written by Senior Strategist Matthew Gilleard over on PR Week, and read our research and analysis in our Special Reports section.