The Public Accounts Committee has a new report on HMRC out this morning. It should have been entitled ‘Why did Ed Troup get a gong?’ because it makes for uncomfortable reading for HMRC bosses, questioning their commitment to raising tax, eliminating fraud and to using resources effectively. Call it competence, if you like.
I was amused by paras 5 to 9 though, from which I select the following highlights:
HMRC told us that, to help increase international tax transparency, there have been a number of developments in improving access to information about beneficial ownership and interests.
In July 2017, HMRC created a registry of beneficial ownership of trusts, with information about both UK and non-UK trusts.
In addition, Companies House maintains a register of people with significant control which identifies beneficial owners with more than 25% of shares or voting rights in UK companies.
Overseas Crown dependencies and overseas territories maintain registers of beneficial ownership of companies which are accessible to HMRC.
Other initiatives, such as country-by-country reporting and automatic exchange of information, which are key components of the Organisation for Economic Co-operation and Development’s (OECD’s) Base Erosion and Profit Shifting (BEPS) Action Plan will, by increasing global tax transparency, also help address some of the systemic issues highlighted in the leaked papers.
In relation to large corporations, HMRC expects the Diverted Profits Tax, which raised £280 million in 2016−17, to be a ‘game changer’ and lead to higher Corporation Tax revenue. HMRC also expects a change in multinational companies’ behaviour as a result of the introduction of country-by-country reporting which will increase the transparency of the amount of tax they pay.
Why am I amused? Because every single one of those changes has got its direct or indirect (in the case of the diverted profits tax) origin in the tax justice movement. Candidly, you can find them all in here, from 2005.
To put it another way, the initiatives that are helping close the tax gap all started in civil society and not in HMRC.
So let me ask the obvious question, which is why isn’t civil society represented on HMRC’s Board?
And come to that, why do they talk to the part that initiated all this thinking so rarely?
And for the record, I am not seeking appointment, but there are several who could be usefully considered, in my opinion.