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TW Ed picks holes in the PAC's concern over external tax experts advising HMRC.

Well, I imagine you'd be disappointed if I were NOT to mention the Public Accounts Committee's report Tax Avoidance: The Role of Large Accountancy Firms, and the media frenzy which ensued.

I think it rare that I find myself on 'the same side' as Treasury Minister Mr. David Gauke, but it seems he has retained a sensible perspective and refused to condemn the secondment of tax experts from "The Big 4" to HMRC. As well he might.

A few observations:

HMRC undoubtedly gains a better appreciation of the outside world, how business works and how its policies and legislation are implemented, from the input of those external advisors.

Given its resources and the overall direction of travel, It cannot afford to do otherwise.

The report complains,

"There is no clarity over where firms draw the line between acceptable tax planning and aggressive tax avoidance."

I cannot see that the PAC's involvement has done anything to address the lack of clarity. To be fair, I think it is right to have the debate - just not to single out the Big 4 or anyone else for that lack of clarity. If I were being argumentative, I might suggest that they instead look a little closer to home. They are MPs, after all. And what do MPs make..? Legislation. And just how good is that legislation..? (I wonder how quickly this year's mammoth Finance Bill will make it through the debates?).

"KPMG seconded staff to advise government on tax legislation, including the development of the 'Controlled Foreign Company' and 'Patent Box' rules...We are nonetheless very concerned by the way that the four firms appear to use their insider knowledge of legislation to sell clients advice on how to use those rules to pay less tax".

At this point I am wondering if these are the best examples the PAC could find of the threat posed by external advisers, since

1. One of them is a tax relief designed to attract inward investment in the knowledge economy in the UK - which is why I find myself myself wondering why the PAC should complain that the Big 4 subsequently promoted its use as a way to pay less tax. Hence Mr. Gauke and I finding ourselves on common ground.
2. The other could just as easily go into a report entitled, "Why are we so bad at devising legislation that even after a decade, we are still in trouble with the EC for breaching the principles of freedom of establishment and the free movement of capital, and thereby making people pay too much tax?" Since in this case, 'less tax' might actually be on nodding terms with 'the correct amount of tax', I am again struggling for a reason to share the PAC's concerns..

It is worth bearing in mind how badly HMRC lost the legal and moral high ground in Cadbury Schweppes - and it has been playing catch up since. One might summarise that the European Court found that UK legislation was not fair. Hardly what you want to hear about the agency/ies tasked with ensuring that "everyone pays their fair share".

For those who think me unduly caustic, I suggest it is as nothing compared to what will happen when all those pensioners, spurred on by Mr. Iain Duncan Smith, start paying loads more Gift Aid to charity to help the government balance its books, and then get hit up by HMRC for a stealthy tax charge under ITA 2007 s 424 for the Basic Rate tax they're no longer paying...

Regards all,

TW Ed