The House of Lords has continued to hear evidence on the General Anti-Abuse Rule, the latest hearing being this week. The transcript has not yet been published, but Accountancy Age has reported:
A more widely targeted general anti-avoidance principle would create "uncertainty", provide HM Revenue & Customs too much discretion and divert its resources away from other activities, Lords have been told.
Appearing before the Economic Affairs and Finance Bill Sub-Committee, treasury director for international business tax Mike Williams said a wider rule - such as the one put forward by Labour MP Michael Meacher that would address national insurance and VAT - would take in too many ordinary tax planning measures.
This, very respectfully, is absurd. What we have is H M Revenue & Customs saying it does not want to tackle tax avoidance, and most especially that of the sort that the Prime Minister is saying is wholly unacceptable.
Why not?
What's wrong with our tax authority taking on tax avoiders?
Why don't they want to close the tax gap - as the Public Accounts Committee also suspected they did not wish to do?
And it's just nonsense to say a wider GAAR will produce uncertainty. Where is the uncertainty in saying that is someone tries to abuse the law they will be prevented from doing so? That provides certainty - because it stops the abuse.
I am afraid Mike Williams shows exactly why HMRC needs top down reform. What he's actually saying is HMRC wants to continue to allow cosy tax planning deals for major multinationals whilst hiding behind the excuse that they're permitted by regulation which is beyond our control - which is utterly untrue.
It's time for HMRC to smell the coffee, I think
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This is an inevitable consequence of the corproate capture of the senior level of management (e.g. the Board, sub committees, etc) of HMRC, that has been ongoing for several years and of the inevitable change in culture and purpose this was bound to engender within the organisation. Add to that successive governments (not forgetting the Treasury, of course) scared of and/or ideologically disposed to avoidance – whatever the rhetoric might suggest – and there you have it. Yet another public organisation that’s completely forgotten it has a duty to the citizens of thic country, not simply to big business and the 1%.
The absolute overall of HMRC: yet another policy that Labour could unambiguously commit to and that would do their credibility as ‘one nation Labour’ a world of good. Bet they won’t, though.
I asked a longstanding friend, who works in Whitehall for his view on a GAAP. You’ve guessed it, he trotted out the same line, it would create “uncertainty”.
My response is why are we mollycoddling corporates? We live in a very uncertain world. Real people have to cope with all manner of uncertainty. Exanmples are as follows:
Will I have job, next week or next month?
If they’re on a zero hours contact, will I have work this week or next week?
Will ever find a job?
Given the rising costs of food, water shelter, council tax and work related commuting,will I beable to afford to pay all my bills?
How will I be able to afford to retire?
The list goes on and on….
Elimination of uncertainty smacks of socialism for the most wealthy!!
Indeed. I almost choked on my tea when I read the “..and divert its resources away from other activities”. What on earth are HMRC meant to be doing with their time if not working to collect tax that is not freely paid but should be?!
Richard
you seem to be assuming that the wants & needs of HMRC & HMT are identical.
I suspect they aren’t
LoL
E
The reason, of course, that people mean different things by avoidance. Can you give examples of what you consider to be reasonable tax planning, and then I can look and see if they’d be caught by Mr Meacher’s proposal?
Investing in a pension
Incorporating a new uk company and transferring a trade to it and then selling the newco to obtain SSE, rather than sell the trade and assets and paying ct on the gain
This has already been discussed at length here
Get rid of uncertainty by introducing a clearance system paid for by the taxpayer- voila the argument disappears. Given this was a recommendation of the gaar consultation and looking at the experience if other countries with a gaar I am bemused as to why we aren’t having this
Maybe rm could find out during his committee meetings?