HMRC’s dodgy deals with large multinational companies

Image by Gerd Altmann from Pixabay

Today we are responding to a government call for evidence on the tax administration framework. Needless to say this is a broad topic where we have a number of concerns, but our response focuses on the issue of HMRC settlements with large corporate taxpayers. There is much public concern that HMRC is too lenient with multinational enterprises, at the expense of the taxpayer at large, and we believe that public concern to be well-founded. We identify two specifc problems, and propose two specific solutions.

First, we believe that the ordinary rules regarding taxpayer confidentiality - designed to preserve the privacy of individuals - are too stringent in this context. Large companies are too powerful and important to be protected from scrutiny in this way, and by the same token HMRC’s dealings with them should not be protected from scrutiny either. We propose legislation to enable HMRC deals with large corporate taxpayers to be scrutinised by a parliamentary committee.

Secondly, we believe that HM Treasury’s control over HMRC lacks transparency and is open to abuse. HMRC is required by statute to comply with directions from HM Treasury, and that obligation trumps HMRC’s duty to maximise revenue. We believe that may well be the reason HMRC has been too lenient towards large corporate taxpayers - HMRC may have been given no choice by HM Treasury. Past governments have, after all, expressly described the light touch approach of the tax system as an element of the UK’s “competitive” offering to global megacorps. We propose legislation prioritising HMRC’s duty to maximise revenue above whatever opaque policy directions they may be given from other parts of government.