TaxCorporate TaxGLOs: the shadow financial secretary’s viewpoint

GLOs: the shadow financial secretary's viewpoint

Mark Hoban, shadow financial secretary to the Treasury and a chartered accountant, challenges Gordon Brown to reveal the costs of the group litigation orders

Most commentators recognise the damage that could be done to our corporation
tax revenues by adverse judgements in the Group Litigation Order cases currently
before the European Court of Justice.

Last year’s Marks and Spencer’s judgement left tax revenues relatively
unscathed, but the outcome of cases on the tax treatment of Controlled Foreign
Companies and dividends paid to a parent company could be more damaging.

If these judgements go against the government, the sustainability of public
expenditure would be at risk and the Treasury would need to look to other taxes
to fill the gap.

You would have thought that in the interests of transparency and open
government that the Treasury would have published their estimate of the possible
loss from these cases.

It is not as if the Treasury lacks the means of letting the public know. The
pre-Budget report was the most recent set piece occasion when they could have
done so.

But the Treasury is stubbornly refusing to give us their estimate of the tax
revenues at risk. When Accountancy Age tried to use the Freedom of
Information Act to find out the figure, the Treasury hid behind an exemption and
refused the request.

In the absence of Treasury figures, others have estimated the exposure as
being as high as £20bn.

The refusal of the Treasury to state what their estimate is (and
Accountancy Age was at least able to find out that they had actually
made one) tells us that it has yet to wake up to the twin threats Europe poses
to our tax revenues: as the changes in transfer pricing rules show, European law
will continue to force us to adjust our tax regime and our European competitors
are cutting their corporation tax to improve their competitiveness.

By not publishing their estimate of the financial exposure from the Group
Litigation Orders, the Government appears to be shying away from a public debate
about the future of tax.

Gordon Brown should stop hiding behind exemptions from the Freedom of
Information Act, come clean on the Treasury’s assessment of the cost and tackle
these issues.

If he is not prepared to do so, it shows that he is not facing up to the
future. Gordon – publish or be damned!

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