AN IN-DEPTH REVIEW of the country’s corporate taxation system is to be undertaken by the Treasury Select Committee.
The committee’s chairman Andrew Tyrie (pictured) formally launched the plans as Exchequer secretary to the Treasury David Gauke fielded questions in the commons on technology giant Google’s £130m settlement with HM Revenue & Customs, which cover ten years of back tax.
Tyrie told the House of Commons on Tuesday that a review would be undertaken.
The inquiry is not directed at Google, but will examine the reasons for the UK’s shrinking tax base and how effective HMRC has been in tackling tax avoidance.
“A corporation’s duty to shareholders will be to minimise its tax liability. It should be the duty of those making tax policy to find better ways to limit the elasticity,” Tyrie said as he announced the inquiry.
“Google may be treated as the symptom, but it is not the cause,” he added. “There is a lot the government should be doing. Tax policy must be made more practicable and the tax system more coherent.”
Tyrie went on to say the complexity of tax law is “turning what should be a straightforward principle – that everybody should pay the correct amount of tax – into a piece of elastic”.
“For corporation tax, for instance, the problem is exacerbated by the globalisation of economic activity and any liability to tax that accompanies it,” he said.
Speaking in the House of Commons, Tyrie suggested “fundamental reform” of the tax base might need to be considered in light of the Google case.
In the same debate, chancellor George Osborne was mocked by Labour for claiming the £130m deal with Google was a “major success” after Number Ten failed to show similar pride in the deal.
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