There is much to note in yesterday's announcement from the Treasury that it was blocking abusive claims by the energy companies for tax relief on spending that they had not, in effect, incurred sine the work undertaken was paid for and spent for the benefit of their customers. As the FT noted:
George Osborne snapped shut a £900m tax loophole on Wednesday, and the chancellor also branded the behaviour of utility companies that had sought to exploit it as “completely unacceptable”.
And he was right. But what was telling was who he was criticising>
The Treasury announced legislation to block gas and electricity distribution companies from claiming “windfall” capital allowances for historic costs dating back decades that were incurred by their business customers.
I wonder if that included Npower? What we do know is who advised those making the claims:
The companies were understood to have been advised by Deloitte, the professional services firm, a development likely to inflame the controversy over the role of big advisory firms in tax avoidance.
That's Dave Hartnett's new home, of course. And that of Bill Dodwell, my erstwhile colleague on the General Anti-Abuse Rule advisory panel:
Bill Dodwell of Deloitte said the companies were not attempting to claim allowances that had previously been the subject of a claim. “In the vast majority of cases we have seen nobody claimed for the capital allowances.”
Ah, that's al right then, isn't it? Because "something hasn't been claimed it must be ours" is the logic. I think most police have heard that at one time or another. And it's just a false logic.
The claims are thought to date back to a rewrite of the tax law in 2001 to make it easier for laypeople to understand, but this has run the risk of introducing ambiguity.
So now we can also see the motive for tax simplification.
What a sordid little tale.