Dec 20 2011

UK HMRC’s cosy relationships with corporations: told ya

Posted by: Nick Shaxson in: Thoughts

From Treasure Islands, quoting an unnamed HMRC corporate tax expert whom I’d met in Pizza Express in London:

‘The policy used to be: try to tax offshore profits at the same rate as onshore so as not to encourage people to put business offshore,’ he said. ‘But in the last ten years this has been skewed hugely towards the multinationals.’ After the Labour government came to power, the whole culture in HMRC changed. Taxpayers became ‘customers’. HMRC used to assign a ‘case director’ to investigate multinationals; this is now a ‘customer relationship manager’ charged with building a happy connection. After a review in 2006, promising better ‘customer service’ and ‘greater mutual respect and trust’, average times spent on international investigations fell from thirty-seven to eighteen months.

‘We used to have a priority to collect tax,’ my informant said, ‘now we have a priority to have a good relationship. We have got into a situation of persuading ourselves that it is a win-win to have businesses pay their taxes voluntarily, rather than have us take them to litigation.’

The highlighted quote kind of sums it all up. Now, corroborating this, is a new report just out from the UK parliament’s Public Accounts Committee:

This report is a damning indictment of HMRC and the way its senior officials handle tax disputes with large corporations. We uncovered both specific and systemic failures which must be addressed.
. . .
It is absurd that we had to rely on the media and the actions of a whistleblower to find out about the details of individual settlements. Parliament and the public have legitimate concerns that large companies are being treated more favourably than ordinary taxpayers, whether they be small businesses or hard-working families.

The Department’s working practices must be seen by the taxpaying public to be absolutely impartial. The impression being given at the moment is quite the opposite, of far too cosy a relationship between HMRC and large companies.”

Told ya so. Now the hard work begins of persuading them not to brush this all under the carpet, in the interests of Tax Haven UK. The fact that people are now prepared to go out into the streets for this cause gives me hope that something, at least, might be done.

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