THE BACKLASH against the Public Accounts Committee from the profession this week has been substantial.
Of course, there are some practitioners who, like much of the wider public, are indignant over the low corporate tax bills paid by Google, Amazon and their luminaries. At face value, it is entirely understandable, but tax law itself is being ignored by them.
That isn’t to say those companies don’t have cases to answer, and it is imperative that the structures of these companies are fully understood by the relevant tax authorities across the jurisdictions they operate in. Rather than talk of fairness and morality, the issue is whether they are accurately representing their activities? That [almost] goes without saying.
A combination of a lack of tax knowledge (evidenced brilliantly by MP Ian Swales’ confusion over how VAT works), accusations and stoic unwillingness to take evidence on board has seen a large number of advisers describe the committee’s work variously as “shameful”, “disgusting” and “biased”. And so, with this week’s hearing seeing Google branded “evil” by chairwoman Margaret Hodge, the rhetoric has been ramped up and the profession’s relationship with the committee is more strained than ever.
Not least when, as many experts observed on Twitter, there is a strong case to suggest the committee is significantly over-reaching its remit.
On its own website, the committee states its role is to examine “the accounts showing the appropriation of the sums granted to parliament to meet the public expenditure, and of such other accounts laid before parliament as the committee may think fit”. For many, tax avoidance schemes and the affairs of multinational companies do not fall within that description.
When you take into account the unusually bullish performance given by HM Revenue & Customs chief executive Lin Homer (pictured) and her director-general for business tax Jim Harra, the severity of the situation begins to take shape.
The taxman collects the tax due under law, not what the PAC wants it to collect, Homer told the committee in a rather notable departure from her previous, meeker, performances.
“It’s a matter for the application of expert tax knowledge, and that’s something we [HMRC] do rather better than the select committee,” Homer said, adding pointedly: “Unless, and until you [MPs] change the law, we can’t collect the tax you would like us to collect.”
When committee member Austin Mitchell ventured that “it took the committee to expose tax dodging”, Homer simply replied: “With respect, no.”
It would be churlish to suggest at this point that the startling change in Homer’s demeanour is indicative of a loss of respect on her part, but it is clear the wider accountancy profession has.
Yet while the angriest claim that the committee’s position is untenable, it’s unlikely the government sees it that way. With Hodge garnering plenty of attention, and with the potential of securing the Treasury extra funds, very little is likely to change.
Calum Fuller is tax correspondent for Accountancy Age and Financial Director
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