HMRC goes soft on tax avoidance

Posted on

The FT has reported:

Revenue & Customs will adopt a less combative approach to resolving tax disputes with businesses in a move designed to cut a mounting legal logjam and unlock billions of pounds tied up in court battles over avoidance.

Dave Hartnett, permanent secretary for tax at HMRC, said there had been examples of officials being too “tough” in disputes over tax assessments. “HMRC is packed full of very intelligent people, but we are sometimes too black-and-white about the law,” he told the Financial Times.

The move, part of a drive for greater efficiency on the part of the cash-strapped department, could produce what Mr Hartnett called a “surge” in revenue over a couple of years, on top of extra money being collected in cases of individual tax evasion.

So Hartnett, the man who just a few years ago said that he’d make sure tax avoidance was ‚Äòno longer worthwhile’ is now going soft on it in the week Nick Clegg said that the coalition is considering the introduction of a new rule “to ensure that wealthy individuals pay their fair share of tax” and a week or so after Cameron says he’s going to make the fight on benefit fraud his number one priority.

Have no doubt, Hartnett could not have said this without Osborne’s permission. Have no doubt too he’s being used as the answer to Nick Clegg – telling him totally unsubtly that there’s not a hope that Osborne is buying any measures to crack down on avoidance at all.

Of course Hartnett has to be pragmatic – he’s one of the Board of HMRC who got rid of one in eight of their front line staff last year who were likely to tackle tax avoidance. Of course he has to be pragmatic. The carelessness of losing the people who could have collected the tax leaves him no other option.

But the messaging is dire. What this says is the Coalition is happy for the rich to abuse, will be soft on their abuse, will not be seeking to enforce tax law (that’s explicitly what Hartnett has instructed his staff not to do) and does not care that it was a lack of tax income, not a loss of control of spending, which gave rise to this crisis.

And the Treasury is also using a senior civil servant to snub the deputy prime minister.

As fiascos makers go this mob are proving themselves masters of the art.