IT IS FAIR TO SAY that Richard Murphy has established himself as one of the most vociferous voices in tax in recent years.
Given his work at Tax Research UK and his role in founding the Tax Justice Network, he is well-versed in the tax issues Britain faces both today and historically. That knowledge has seen him appear as authoritative contributor on various news outlets across television, radio and print.
Yet his opinions, particularly on tackling tax avoidance and evasion, are not universally welcomed by his peers in the profession. By his own admission, he would be a worthy contender – along with the taxman’s outgoing permanent secretary Dave Hartnett – for the moniker of ‘most disliked man in tax’.
“I’m sure Dave outdoes me. If you went to the Crown Dependencies – Guernsey, Jersey, the Isle of Man – I think I’d definitely win. But in the UK, I think Dave Hartnett will come higher than me. And to be totally honest, I think you’d also find some people who would say I’ve got it right,” he tells Accountancy Age.
Murphy’s strident views have earned him a sizeable group of detractors, but he is comfortable with the state of affairs.
“I never set out to be a controversial figure and I’m not [trying to be] now,” he says. “What I’m saying is I believe that it’s a duty for people to pay tax and it’s a duty of our government to stand up and say they have a right to collect tax.”
For Murphy, there has been a failure of the government to tax “fairly, properly and appropriately”, which, in turn, “lets people believe that it’s possible to get away with things”. That belief, he says, is creating “a corrosive impact upon the morale of British business and its willingness to believe that it’s got to play by the rules”.
“But I’m a lone voice in saying that,” he adds. “As a result, I’m controversial. Well, so be it – I can live with that.”
The driving force, Murphy says, behind his interest in tax is a combination of an early interest in the industrial development of the country and a sense of social justice.
What started as a schoolboy interest in railways morphed into a wider curiosity in business and accounting. The success of the train during the Industrial Revolution and the economic prosperity it ushered in led Murphy to his eventual fascination with tax.
“I always had a social conscience,” he says. “I seem to have been born with one. Why tax? Because frankly, in my opinion, tax is something that can liberate people from poverty.
“There are literally billions of people living in poverty and I believe that we can use tax to improve the wellbeing of people in this country, throughout Europe and the world at large.”
Given that laudable sentiment, Murphy’s dissatisfaction with the status quo is understandable.
Indeed, there are myriad changes he would like to see made. They include employing significantly more staff – “at least 20,000” – at HMRC across regional centres, making country-by-country breakdowns of where multinational companies pay their tax, and addressing the “curse” of tax havens through striking agreements on full, automatic information exchanges, with the threat of a withholding tax levy as a motivation.
“Withdrawing tax offices from communities all over the country is simply the withdrawal of part of the democratic process so it’s the wrong measure. Let’s re-establish the presence of the Revenue in those local communities,” he says.
“We have to bring into force country-by-country reporting so that we know where multinational companies are and where they are not paying their taxes. Then we have to use that new information to change the basis of taxation of multinational companies to what is called a unitary apportioned basis.That means that we sweep out of their basis of taxation the whole of their profits which are attributed to tax havens wholly artificially.”
In spite of Murphy’s concern that there is a major problem with tax evasion, he is not completely despondent about the functioning of the tax system, and sees some “potential”.
“Credit where it’s due,” he says. “Our shadow economy [the part of an economy involving goods and services paid for in cash and not declared for tax] is not as bad as most. At the moment, we still have a tax system which has the potential to work in the UK. I think it could work a lot better than it does, but we have a population who are clearly showing they think paying the right amount of tax in the right place at the right time is something they believe in.”
Whether that potential will ever be realised is debatable, but one thing that Murphy has been pushing for is a general anti-avoidance rule, which is currently in consultation.
However, the content of the legislation leaves something to be desired as far as he is concerned, as he believes its scope is too narrow.
“What we need is the parliamentary endorsement of the Ramsay principle which we had for 20 years from 1981 to 2001,” he says. “That was a House of Lords decision which did in effect create a general anti-avoidance principle. What we need is to actually go ahead and get that legislated but what we’re being offered is no such thing.”
There seems little political appetite to bring back that rule – and the question of whether one of the ‘most disliked men in tax’ will ever be satisfied is seemingly a long way from being answered.
Research also finds that 84% of businesses believe that the government has not provided enough information about digital tax plans
A total of £16bn was lost through tax fraud last year, according to estimates released by Pinsent Masons
Rosamond McDowell looks at key changes to inheritance tax policy, which apply from April this year
Additional tax a result of compliance investigations by HMRC, but overall revenue falls