The CBI has published a statement of principles outlining how companies should conduct their tax affairs to improve transparency, which includes using narrative reporting.

The business lobby group strongly recommends that these principles are followed by British businesses and all companies operating in the UK.

John Cridland, CBI director-general, said: 'UK businesses make a huge tax contribution to the UK economy, paying £161bn this year - almost a third of total tax receipts.

'But companies need to do a better job of explaining their tax affairs to the public. We are encouraging all companies to explain why they pay what they do in a straight-forward and accessible narrative, ideally on their website.'

The CBI has published a statement of principles to encourage more responsible tax management, including guidelines on tax planning and has called for more transparency and reporting focusing on the relationship between HMRC and business.

The CBI said 'relationships between UK businesses and HMRC should be transparent, constructive and based on mutual trust with the result that HMRC should treat business fairly and with respect, and with an appropriate focus on areas of risk'.

It has also called for more transparency on corporate tax policy, suggesting that companies could publish information such as 'an explanation of their policy for tax management, and the governance process which applies to tax decisions, together with some details of the amount and type of taxes paid'.

The CBI statement of principles is available HERE