PAC not giving taxman enough credit – ICAEW

THE PUBLIC ACCOUNTS COMMITTEE’s assessment of the role played by HM Revenue & Customs and other areas of government in the fight against tax avoidance is “both unfair and somewhat unrealistic”, according to the ICAEW.

The publication of the committee’s Tax avoidance: tackling marketed avoidance schemes report saw chair and Labour MP Margaret Hodge claim the taxman is “losing the game of cat and mouse” to clients and promoters of tax avoidance schemes as they deliberately take advantage of the time it takes HMRC to shut down a particular method.

“The die are [sic] loaded in favour of the promoters of tax avoidance schemes”, who are, she said, “running rings around” HMRC.

However, the ICAEW today said it is “not helpful to lay most of the blame at the feet of only one of the protagonists”, highlighting the role played by parliament in shaping the law and equipping HMRC to address avoidance.

In a blog posted on the institute’s website by its tax faculty, it added: “There may remain more to be done but to blame HMRC for all that you [the Public Accounts Committee] currently believe is wrong with the current situation is both unfair and somewhat unrealistic.”

In its report, the committee noted it felt Australia’s anti-avoidance model could be followed in the UK, but the ICAEW disputed the proposal.

“Theirs is a different system to that in the UK”, said the institute. “Australia has a system of advance rulings and as a matter of commercial reality promoters are not going to be able to sell schemes to potential customers unless the scheme has a ruling: there would be no takers otherwise.”

It also refuted the committee’s claim that “Australian promoters have to get clearance for schemes before they introduce them”, adding that if there is anything to be learned from the Australian system, HMRC’s recent appointment of Jenny Grainger as director-general of enforcement and compliance would be useful following her senior roles in the Australian Tax Office.

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