GAAR panel chair should be allowed to choose own people

TODAY’S DAMNING REPORT on Google’s UK tax affairs from the Public Accounts Committee was accompanied by a rather contradictory announcement by committee member and Labour MP Austin Mitchell.

Alongside the committee’s assessment that the search engine’s claims of drumming up business in the UK before signing off deals in Ireland are “deeply unconvincing”, and HMRC’s handling of the situation “not sufficient”, Mitchell (pictured) weighed in with plans to put forward his own suggestions for membership of the composition of the General Anti-Abuse Rule (GAAR) advisory panel.

The legislation, designed to prevent contrived tax avoidance schemes, was included in the 2013 Finance Bill and will take effect once it has received Royal Assent in the summer. The tax-man is currently taking applications for positions on the eight-strong panel, to be chaired by Patrick Mears, the former partner and head of tax at law firm Allen & Overy. The panel is to be independent, the positions are voluntary, and initial appointments are to last for three years, subject to review.

In his press release, Mitchell championed the causes of Labour MPs Kelvin Hopkins and John MacDonnell, former Labour MP Jim Cousins, professor of economics at Essex University Prem Sikka, and Tax Justice Network campaigner Richard Murphy. He also urged Mears “not to appoint anyone from the tax avoidance industry”.

Whether they would be worthy additions or not, my point is simply this: if we want an entirely independent panel, Mears should be free to consider and appoint the applicants as he sees fit, unfettered by members of the Public Accounts Committee, or indeed anyone else.

Allowing one MP, whose stance on tax avoidance is clearly very hard-line, to affect the selection process would not result in an independent panel.

In his press release, too, Mitchell accuses the “tax avoidance industry” of “drawing up the legislation”, before suggesting “the intention is to cram it with people from that industry who will be judge and jury in their own cases”.

But who does Mitchell mean when he talks about the tax avoidance industry? Boutique firms or the accountancy profession more generally?

“I’m sure the Big Four accountancy firms and large multinational corporations will be only too willing to have staff seconded to this committee,” he adds.

Of course, no one group should have undue influence over the panel, but there are two points here. Firstly, the panel should include tax practitioners if it is to be effective, and secondly, in putting forward his own suggestions, Mitchell is essentially attempting to influence the make-up of the panel. Precisely what he has accused the “tax avoidance industry” of doing.

Why don’t we just leave Mears be and see who he comes up with? That, to me, seems like the way forward.