Letter regarding HMRC and taxation to Margaret Hodge MP

The letter shown below has been sent to Margaret Hodge.  Should a reply be received it will be published here.


Dear Mrs Hodge,

Since the recent appearance of senior HMRC representatives including Edward Troup, HMRC’s Tax Assurance Commissioner and Jim Harra, the Director-General of Business Tax, before the Public Accounts Committee, I have undertaken some reading which has resulted in me identifying two very important questions that need to be answered.

Following your recent appearance on BBC Radio 4’s PM programme where you explained that you actively seek to engage with voters, I hope you will be kind enough to answer my questions.

You were quoted as saying in Committee that:

It looks to me that you should be litigating. Why have you not chosen to litigate and test your powers?  Why have you not litigated against one single internet company?

Make a few cases, a few show cases. It’s so bloody obvious.

It transpires HMRC has already pursued a case to test their powers in respect of the movement of capital within the EU, the Thin Cap Group Litigation v Commissioners of Inland Revenue.  In 2007 the European Court of Justice rejected HMRC’s case.  HMRC therefore clearly know the answer to your question is that they have tested their powers and know they would lose such a case.

My first question is, although Mr Troup did say, “We make sure we collect the tax due under the law,” why did neither he nor Mr Harra reference the Thin Cap Group Litigation case in their evidence to your committee in answer to your question, explaining that EU law prevents the taxation you would like to see applied to the likes of Google, Facebook, Amazon and Starbucks in the UK prior to transfer payments being made to another EU member state?

My second question is this.  Given the ECJ verdict in respect of Thin Cap Group, have you not been informed by advisers or civil servants about this failed test of powers, as it is central to the UK Exchequer’s inability to tax profits made by corporations that based their EU trade in another member state?

I am sure you will agree that it is only right that people should be encouraged to understand the laws that apply and their origin, and that discussion related to this matter in Parliamentary committees should be open and transparent.  It is clear that the UK does not have tax sovereignty as laws made elsewhere pertaining to taxation have primacy.  Do you not think this should be made clear in your committee?  Will you seek to explore this further in future PAC hearings?

I look forward to and thank you in advance for your reply.

Yours sincerely,

Tom Nightingale

14 Responses to “Letter regarding HMRC and taxation to Margaret Hodge MP”

  1. 1 Dizzy Ringo 09/11/2013 at 2:08 pm

    With regard to the Thin Cap case, I find it surprising that the exceedingly well paid researchers for the PAC were unaware of the case and the judgement.

    This raises two questions:
    Were the researchers unaware of the case – in which case I suggest that the PAC needs some new researchers
    Did the Chairman choose to ignore the information given to her in favour of a cheap political point scoring – in which case she should resign.

  2. 2 wj (@wj557) 09/11/2013 at 2:20 pm

    I hope that it causes a major embarrassment to both Hodge and the HMRC – please let their be one interested journalist, attached to a large paper, that reads this and takes it up.

    (Twiddles thumbs and waits for winged porcine creatures)

  3. 3 wj (@wj557) 09/11/2013 at 2:22 pm

    Oops – there, not “their”

  4. 4 Bellevue 09/11/2013 at 2:52 pm

    Tim Nightingale!!!! I just KNEW you would have a lovely name.
    Go you, and best of british with Margaret Hodge (none of us will be holding our breath!)
    If I didnt know that the position was already filled, I would want to marry you, Tim, and have your babies!
    (mind you, I tried marriage once, and I REALLY didnt like it…… so as soon as I can get out of this one, I shall not be trying again!)
    You say JUST what I would say if I could collect my thoughts in the way you can!

  5. 5 dave ward 09/11/2013 at 3:17 pm

    Good for you – but I’ll be amazed if you get a reply. Since when did politicians like admitting they are ignorant / wrong?

  6. 6 martin brumby 09/11/2013 at 3:31 pm

    Cracking letter!
    I wouldn’t waste too much time sitting next to the letter box awaiting a response…

  7. 7 Autonomous Mind 09/11/2013 at 3:40 pm

    Thanks Bellevue, but it’s Tom :)

  8. 8 odeston 09/11/2013 at 4:18 pm

    Try emailing your letter to the news desks of all prominent newspapers. They won’t be much wiser but they will be properly informed. And –
    Para. 1 should read”my identifying” – not “me identifying…”

  9. 9 Mark B 09/11/2013 at 5:12 pm

    Hodge has been rather snookered with that.

    Well done AM. Or should I now call you, Agent Nightingale ? ;o)

  10. 10 Ken Whittaker 09/11/2013 at 10:28 pm

    If only a prominent eurosceptic MP would take your letter as his blueprint and issue an open letter to Mrs Hodge in a national newspaper. This is the sort of thing Farage could do.

  11. 11 Pogle's Woodsman 10/11/2013 at 12:55 pm

    Forwarded and linked to my own MP.

  12. 12 Nick Cooper 10/11/2013 at 2:46 pm

    Interesting, but perhaps we should consider that the PAC covers a considerable number of issues, HMRC being only one. We should also consider that the PAC is not provided with a dedicated research team, although it may prove to be an excellent idea to provide such resources which would be independent of the National Audit Office.
    It is also worth noting that the PAC has had considerable problems in dealing with HMRC since there would not appear to be any sanctions which they can take against the Senior Management team – other than making the Chief Legal Officer testify under oath – and the fact that HMRC is a non-Ministerial Department.
    The PAC may not achieve the loft goals which some appear to think they should, but the PAC has never been short in identifying areas of HMRC’s policy and activity which would bear further review. Bearing in mind their total commitment, this could be considered a rather magnificent achievement.
    Finally, the logic that one particular legal case is the absolute president for any and all cases which may seem similar is just a little simplistic?

  13. 13 Autonomous Mind 10/11/2013 at 7:07 pm

    Nick, the principles of the four freedoms of the European community are absolute. You either have freedom of movement of capital, or you don’t.

    The addition of transfer payments to movement of capital has cemented the rules. So the precedent has been made and the rule confirmed. It is not too simplistic to cite it, as it would not be too simplistic to cite Carlill v Carbolic Smoke Ball Company in respect of establishing what constitutes a binding offer that can be accepted by anyone on performance (my Law ‘A’-level is finally useful for something…)

  1. 1 A reply to the Letter regarding HMRC and taxation to Margaret Hodge MP | Autonomous Mind Trackback on 16/11/2013 at 11:03 am
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