The spies who love tax

Little is known of the AIU other than it will ‘improve the Inland Revenue’s understanding of the tax avoidance market’ and is expected to cost £1.5m a year to operate.

To me it all sounds a bit Ian Fleming. AIU agents will swim to their basement offices at Somerset House in frog suits under the cover of darkness. Naturally, they will be wearing their standard issue woollen grey suits and tightly knotted ties underneath.

But while the Revenue won’t get too many James Bonds for £1.5m, it is a further sign of the determination within Whitehall to make large corporations pay their fair share of tax.

Exactly how the AUI will improve the department’s understanding of tax avoidance is not clear. Perhaps it will try to recruit specialists from the private sector who have intimate knowledge of current scams? But you won’t get many of those to the pound either.

Maybe it will set up a dedicated, anonymous tip-off hotline where petrified tax managers can place calls to the Revenue while their immoral bosses’ backs are turned.

However it intends to achieve its goal, the AIU could be a dangerous move.

The battle lines against tax avoidance were well and truly drawn in the chancellor’s Budget announcement of avoidance scheme disclosure rules.

Few complained, as long as the compliance burden on companies did not become excessive.

But creating a dedicated intelligence unit sounds far more underhand and could mark the beginning of the tax world’s very own Cold War.

Communication is the key to a successful and fruitful relationship between big business and government. And an Avoidance Intelligence Unit does not sound very communicative.

I suggest you pour yourself a stiff drink – shaken, not stirred, naturally.

David Rae edits the tax page on Accountancy Age.