My old sparring partner, Prof Judith Freedman of the Oxford Centre for Business Taxation, has an article in the FT this morning on the need for the HMRC reform. What is interesting is the conclusion:
If the current system [of tax administration] cannot provide the reassurance the public demands, then we should create one that does – perhaps with a new branch of the NAO that is independent and has sufficient expertise to assess individual cases. What we cannot do is turn the media and individual politicians into the ultimate arbiters of the tax that is due.
Judith reveals in the last sentence that she is intent on fighting straw men: no one anywhere has argued that anyone but a tax authority should decide what tax is due. We have, rightly, argued that we should be able to see sufficient evidence to be sure that they are doing what is required of them. It is a shame that Judith dismisses country-by-country reporting in reaching her conclusion as a result, although it is also hardly surprising given the funding of the Oxford centre. Her doing so dramatically undermines her argument.
That argument does appear though to create new common ground: it seems to me that Judith is joining me in calling for an Office for Tax Responsibility. There are some links on this idea of mine here, and here.
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“…no one anywhere has argued that anyone but a tax authority should decide what tax is due. ”
In reply to Pardeep Landa earlier:
“I do not think the law is being followed in the case of Google
“I thnk they do gave a PE
“I think HMRC have a duty to litigate”
You have quite clearly decided that more tax is due in the case of Google, despite HMRC having decided that it isn’t.
The only way I can reconcile your comments is that you think HMRC should make the decision, but that the decision should be revised if it is incorrect.
Now if you disagree with Dr Freedman’s suggestion that the NAO should review HMRC’s decisions, but you maintain that there should be such a review, who would you propose should carry it out? I assume you agree with her that it should not be “the media and individual politicians” – so who?
Andrew
Bluntly, if you think Google is not underpaying you are in a minority of 1. It is obvious they have constructed an artifice to reduce their tax bill. If you really think they haven’t lease say why. Ignore the artifice: look at economuc substance and I suggest to you I am glaringly obviously right
I am then sating I think HMRC have appraised the available evidence incorrectly.nthat’s hardly an uncommon position for an accountant to take.
I am saying in such cases a second view should be formed by an OTR. I think Judith agrees.
What is your point?
My point is that you said Dr Freedman was wrong, but your other comments suggest that you agree with her.
You are now saying you do indeed agree with her, which makes me wonder why you wrote this post saying she was attacking a straw man – as this means so are you.
In short, it would be nice to see some consistency from you.
I am not saying that Google has not underpaid tax, by the way: quite deliberately, as I don’t have access to the information I would require to make such a pronouncement. I am saying that HMRC are the people qualified to decide, and that once they have done so one needs some evidence before one can say their conclusion is wrong. In this I differ from you, who requires no such evidence.
Even if I were, I would not be in “a minority of 1” as I would quite clearly be in agreement with HMRC, who obviously do not think Google have underpaid their tax as otherwise we would have a case going through the courts in accordance with the Litigation and Settlements Strategy; and with Google, who are likely to think they have overpaid. I do not think that agreeing with the only two parties who actually know what they’re talking about would be a wholly unreasonable stance to take, in most cases.
I would however say that yes, Google have constructed their operations in such a way as to reduce their tax bill. Which they are perfectly entitled to do, in my view. I think that the UK should have a hard look at how PE rules work, but that does not mean Google have done anything wrong. I might prefer that they’d done something different, but that doesn’t mean they were wrong: my opinion is not a moral touchstone (unlike yours, of course).
I also think the US should have a look at how they tax foreign profits, but again I don’t think that means Google are doing anything wrong. And defects in US law are lesser concerns of mine, as a UK taxpayer and tax advisor.
I said an aspect of what Judirh said was unfortunate but her conclusion looked like one I can agree with
Maybe nuance passes you by
I am utterly consistent – as ever you appear to have difficulty reading
Which U.S. why you waste so much of my time
Haven’t read the whole article but that excerpt suggests to me an ‘independent’ (i.e. outside of democratic control) organisation run by people from the big four.