Taxman hones league table

David Garlick, the head of the large business service at HMRC, has a new toy
to play with. Sitting on his desk, or perhaps filed away in a locked cabinet for
security’s sake, Garlick has a league table of companies.

It’s no ordinary list of large businesses, of which Garlick looks after
2,500. Instead, it’s a league table of compliance. It shows who poses the
greatest risk to UK tax revenues, who avoids tax using complicated tax schemes,
who takes an aggressive attitude to the tax authorities, and who just doesn’t
have enough people in to do the job.

He won’t, unfortunately, share it with us, or the companies themselves for
that matter, he says in an interview to mark the start of the new regime. ‘We
don’t tell people where they are on the league table,’ he says. HMRC only has
‘one-to-one conversations’ about companies’ scores.

That said, the tax authorities are said to have been talking to those at the
risky end first, so anyone who has already been in for a chat might make a few
inferences from that.

As part of Garlick’s new plan, all businesses have relationship managers,
one-to-one officials who focus exclusively on the companies they are assigned

They deal with issues with the relationship, and though they are outside the
statutory investigation system of enquiries, investigations, and so on, that
doesn’t mean they are powerless.

Garlick, recently awarded a CBE in the Birthday Honours list, says that if
companies shun them, they face a heavier burden of investigation. ‘If they don’t
want that relationship it changes the behaviour score,’ Garlick says. If the
behaviour score goes up, HMRC allocates more resources, asks more questions and
opens more investigations.

The move has raised various issues for some. The managers will want to know
what’s going on, what’s coming up, and to be able to flag issues.

As one Big Four partner points out, if you really are planning something that
might result in pre-emptive legislation to shut it down (Shell’s move offshore
prior to the introduction of new CFC legislation in the Budget this year springs
to mind) you aren’t going to want to discuss it over coffee with the taxman

The new model, which comes complete with a brochure, sees managers organized
on a sectoral basis, reporting to Garlick. He has a new response unit, with
around 25 recruits from the profession and big business, to trouble shoot.

HMRC is trying to convey to businesses the risks they are running. The same
thought ran through the ‘Tax on the Boardroom Agenda’ moves, in which Garlick
also played a part.

‘The tax on the boardroom agenda initiative came from a visit to one very
large corporate. There was a total lack in governance and we issued a very large
penalty. ‘The director was moved and another director brought in. The board
needs to understand tax risks they are taking on,’ he says.

There is another problem, of course, that some will decide they are not
taking on enough risk. Will anyone dare?

Related reading

Life Belt with Computer Folders