Readers may remember that this author recently sent a letter (shown below) to Margaret Hodge regarding her comments and those of HMRC directors at a recent meeting of the Public Accounts Committee. A reply has now been received – a not entirely satisfactory one – that follows on below…
Your comments and suggestions about what next steps could/should be taken are most welcome…
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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
The reply received is shown below…
Autonomous Mind 
So far as next steps are concerned an early procedure would be to forward copies of the relevant communications to your local MP and give all facilities for internet links. If the recording of the PAC meeting with HMRC is available on the Parliamentary website, then if you have it to hand, then provide that reference too.
Then I’d send copies of all of those same comms to the HMRC figures ( again, sending the same information to your MP) who were interviewed, and if you can identify them – their respective supervisors. The reply you’ve been given here does not make clear who the ‘relevant specialists’ might be and makes no commitment to raising the point with HMRC itself. However, there’s nothing to stop you doing that.
Send the information with regard to the relevant case postally and under recorded mail and then you have a specific tangible linkage between the information that HMRC and PAC have available to them. Advising your MP of the Royal Mail postal reference will obviate an unambiguous link to Parliamentary obligation. As told previously, I did link this information to my own MP and I’ll let you have a copy of that reply via Email separately.
Naturally none of that will be compulsion for anybody in the chain to actually do anything about it. But nobody will be able to claim they were not in possession of the main relevant points.
Hope that helps.
Typical response, but seeing as any litigation would only bring in £100million or so why waste money on a committee. The gov’t does not need to TAX or “Borrow” to fund its projects so it is better to scrap income & profits TAX.
This will stop TAX HAVENS as a Bonus benefit. This idea that the taxpayers money pays for everything is a MYTH that M. Thatcher spouted in the belief that Gov’t has to “BUDGET” same as households & businesses. But M Thatcher was a lawyer not an Economist.
That’s a good letter and a reasonably good reply, given how evasive they usually are.
I must say, as a tax adviser, the very general rule is that the ECJ rules in the taxpayers’ favour (so on a personal level, I am favourably inclined towards the ECJ). In that sense, you can see Big Business likes the EU a lot more than small businesses (who can’t afford to go to the ECJ and end up paying extra to tax to make up for the shortfall from Big Business).
As Prom1938 says, if we taxed land values instead of income, we’d be home free because the EU does not have any specific rules on this and there is nothing they can or will do about it.
I spent 20 years in a customer facing role, if I didn’t know the answer to a question posed by a customer, I would make damn sure I tracked down someone who did. This reply is little more than the typical automated response to emails larger organisations send out.
I doubt that Ms Couzens has shown Margaret Hodge your original communication, or if she did, Hodge told her to try and fob you off. You should write back insisting that a better answer is provided.
You’re not wrong that it’s a not entirely satisfactory answer. By sticking to the “I can’t answer for the HMRC” she’s ignored your other key points and questions.
I think a letter in response is required highlighting your deep concern that your other question has not been addressed. I think you should press further on your second question – “I am keen as I’m sure Margaret Hodge is, that the Public Accounts Committee is able to scrunitise HMRC properly and the lack of information provided by civil servants which is clearly apparent is of deep concern”.
It will demonstrate that you’re not going to go away if nothing else.
Dear…..
Thank you etc……
Please define who the “relevant specialists” are.
Love and kisses …..
You get my drift?
Well that was a non-answer if ever I saw one!
I agree with Dave Ward on this.
They are politely telling you to ‘please fuck orf and stop asking difficult questions’.
Give them hell, AM!