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TW Ed ponders whether or not the Public Accounts Committee is disappearing up its own well-meaning publicity.

Well, it’s the New Year and people are probably focusing  on Self Assessment – and if you’re one of the lucky half-million or so who HMRC estimates will need to be in SA for the first time thanks to the new Child Benefit clawback, welcome to the party.

Before Christmas, the Public Accounts Committee (PAC) gave HMRC quite a drubbing. Courtesy of Ms Hodge:

“HMRC... ...pursues tax owed by the smaller businesses but seems to lose its nerve when it comes to mounting prosecutions against multinational corporations. It predicted that it would collect £3.12 billion unpaid tax from UK holders of Swiss bank accounts and this figure was built into budget estimates, but in 2013-14 it has so far secured just £440 million. We were astonished that HMRC could not give any reasons for such a shortfall.

 HMRC aims to make the UK more attractive to business but the incentives to international corporations may also enable them to avoid tax. Changes in the controlled foreign company rules and the failure to close the loophole created by Eurobonds are two examples showing where it has become easier for companies to avoid tax while ordinary people continue to pay their share. If that is HMRC’s real intent, then it should be open about it. “

Now, I might buy into the assertion that “It’s easier to pick on the little guys” because if nothing else they, not Amazon, are on my radar.  And it has long been expected that the Swiss deal would fall woefully short.  But cognoscenti will recall that HM Treasury  was heavily involved with the Swiss deal, so it is unclear whether HMRC should actually be in the firing line.

However it is the second paragraph which deserves more scorn, since:

• HMRC does not aim to make it easier for multinationals to pay less tax: that’s HM Treasury. HMRC simply does its bidding.
• CFC rule changes were driven by the Treasury, as part of its road map for helping to make the UK more competitive. HMRC merely implemented the changes.
• There is no Eurobond “loophole” other than that created, (strictly maintained), on purpose, by the government. It is no more HMRC’s intent than yours or mine. There was a consultation on restricting the “loophole” but it was a government decision to maintain the status quo.

I don’t know which HMRC spokesperson responded  with the following observations,

“[HMRC] cannot estimate how much tax might be due if tax laws were different.

HMRC can only bring in the tax that is due under the law and we cannot collect what is not legally due, however much the Committee might want us to. “

but I doff my cap to him or her. Although I bet they would estimate how much tax might be due if tax laws were different, if HM Treasury asked them to.

I have said before that, in my opinion, the PAC can perhaps be forgiven for its populist approach  because it has raised public awareness of some real tax issues.  But I just wish they could aim more accurately. Perhaps, as lawmakers, they might also recognise that the buck actually stops a little closer to home.

Best wishes,

TW Ed