HM REVENUE & CUSTOMS needs to take a tougher stance against tax avoidance arrangements used by multinational corporations and big business, chair of the Public Accounts Committee Margaret Hodge told lords.
Appearing before the House of Lords Economic Affairs Committee, Hodge (pictured) said her committee had “shone a spotlight” on the tax affairs of large companies, adding she was “not sure that HMRC is battling away behind closed doors to get the best deal on my behalf, the taxpayer.”
Hodge has attracted significant media attention over the past year for intense criticism of HMRC and the tax activities of businesses and wealthy individuals, often citing morality in cases where tax structures are legal.
In particular, she has heavily criticised Google, Amazon and Starbucks for their use of offshore jurisdictions to drive down their UK tax liabilities. In a Public Accounts Committee hearing in November last year, she branded their practices “immoral”, and in a more recent hearing described Google as “evil”, in reference to the company’s mantra “don’t be evil”.
“I talk about morality to raise the temperature of the debate, and I do that unashamedly”, she told the lords.
She went on to say the tax system ought to be simpler, and international law should reflect today’s technology.
“I honestly don’t get it, and if I can’t get it, I’m sure most members of the public can’t either,” Hodge said.
Evidence was also taken from the tax partners of law firms Berwin Leighton Paisner, Slaughter & May and Macfarlanes, who argued HMRC should not be assertive for the sake of it. The department’s processes are thorough and effective, they added.
While Hodge opened her evidence with a declaration that she “did not agree with much” of the lawyers’ evidence, Slaughter & May’s Steve Edge insisted it was better for the tax authorities to “seek the right answer, rather than a simple, clumsy wrong answer”.
“Multinationals are aware of social responsibility,” he said. “Transparency for transparency’s sake does not inform.”
When asked if the relationship between big business and HMRC was “too cosy”, Edge said that HMRC must strike the right balance, and there was “less tax avoidance in the UK than in a long time”.
BLP partner Gary Richards said HMRC was incentivised to scrutinise companies, and took its research “quite carefully”.
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
Additional tax a result of compliance investigations by HMRC, but overall revenue falls
Firm expands East Anglian team with appointments to the audit practice and private client tax team