Here we go again.

Why is Vodafone always put front and centre of these claims (I heard Tim Streeter(?)) claim on Today this morning that they could have avoided £8bn of tax – a new high)?

Quite apart from the accuracy of the calculations, what is the moral and legal justification for saying that an English company should pay tax on profits received by its Luxembourg subsidiary (which has paid Luxembourg tax) on profits made from selling Korean and Taiwanese goods and German services to Germans in Germany?

Correction “…should pay tax in the UK on profits…”

I wish people would stop using the term ‘avoidance’. There are three separate issues:

Tax Evasion – use of illegal means to pay less tax that can be pursued by HMRC

Tax Avoidance – use of legal means to minimize tax. If the government don’t like it they should change the law

HMRC Actions – this is what the main part of this story is about. Agreements between HMRC and large corporations. This should be stopped.

Stop conflating them – they are not the same.

Sadly, I’d think it was because the right wing is now interested… *not* because of UKUncut.

@Ian #3:

Agreements between HMRC and large corporations. This should be stopped.

That HMRC should be rather more hard-nosed in such deals – I agree. That they should be stopped – I disagree. Tax law is inherently not straightforward, even without avoidance. HMRC must have discretion to decide that pushing a particular argument risks getting a ruling that would reduce tax take, because it could lead to a court overturning HMRC practice hitherto accepted by taxpayers.

And now the Parliamentry Public Accounts committee – that list of ‘economically illiterate’ people grows ever larger…..

@5

I think most people would agree there has to be some discretion for HMRC to negotiate, and possibly even come to some form of deal. The problem here seems to be that they have been too weak, far too “chummy” with those they are investigating, and then have the gall to refuse to disclose details of their dealings to a committee of MP’s… to the Tower with them I say!

I’m astonished!

Strange though, I wonder why Labour didn’t bring this up when they were in power.

Have I missed the update on this site saying what a good deal HMRC got out of the Vodafone settlement? Because they were almost certainly not liable for any tax payment whatsoever in respect of their Luxembourg sub, so to get more than £1bn out of them was a cracking effort.

http://www.tax-news.com/news/UK_CFC_Rules_Still_Break_EU_Law____49482.html

Its not hard to believe large companies get too easy a ride and if HMRC is getting a lock up the backside that’s no bad thing … even if uk uncut got Vodafone wrong (if it did, we shall see).

The PAC report is here, by the way. Not sure why the OP nor any newspapers don’t link to such things when they talk about them:

http://www.publications.parliament.uk/pa/cm201012/cmselect/cmpubacc/1531/153102.htm

And now the Parliamentry Public Accounts committee – that list of ‘economically illiterate’ people grows ever larger…

I don’t think that adding politicians to that list is a particularly vast step to be honest. Plus, the report explicitly states that the PAC has been dependent for all its facts on media reporting, which in the case of Vodafone relies entirely on a junk article in Private Eye.

Following the riots in August, young people were jailed for stealing shoes, mobile phones, bottles of water etc. For defrauding the state, Vodafone, Top Shop , Goldman Sachs etc will be defended by the Cameron/ Clegg government.

David Hartnett, the chief of HMRC has been scapegoated and will be replaced by a trouble-shooting civil servant who will be a safer pair of hands for the government. Whilst we all pay the price with cutbacks, pay freeze and inflation.

“I don’t think that adding politicians to that list is a particularly vast step to be honest”

Yawn. Are you aware of how many cabinet and shadow cabinet ministers have postgrad qualifications in economics? What about the backroom staff – know how many economists are employed there?

And no, they haven’t based this on media reports either. Do you actually know how parliamentry select comittees work? (you work in law so I’d guess so) They are probably the most functional part of parliament

The specific part about relying on media reports refers only to the fact they found it asburd that a select committee only found out about some cases of concern through the media, and that officials were withholding information and operated in a culture of secrecy;

“The Permanent Secretary for Tax and the Department’s General Counsel and Solicitor failed to answer our questions about specific cases in a spirit of openness. Some of the evidence they provided about the exact order of events, the extent of the Permanent Secretary for Tax’s personal involvement in negotiations and whether legal advice was sought and acted upon was imprecise, inconsistent and potentially misleading.”

They also recieved evidence from whistleblowers within the department. Do you honestly think conservative MPs on the committee are going to accept damning conclusions that directly support UK uncut with no evidence?

It’s really clutching at straws now. Sometimes I get the impression that you would have found Ian Huntley’s defence convincing if he was a registered plc.

Sp even at Christmas the tory butler trolls are still spinning for their Scrooge masters.

So many issues in this story show us how the moronic tory trolls are wrong about almost everything. First,the lie that We are all in this together is blown out of the water.
Second, the constant obsession with tory trolls about trade unions and their financing of the labour party, when in fat the reL scandal is how a few rich people finance and control the tory party. The rich wine and dine anyone in govt who will give the a break. Last week it was That repulsive tory Bell showing how he buys access into tory govts.

Third, it shows how the tory party has not changed. They are still a quasi fascist party that believes in punishing the weak, and rewarding the rich.

4 It reveals how the tory govt is not that interested in paying down the budget quite as quickly as it claims because if it was it could knock £25 billion off the debt if it collected the tax due from the rich and corporations.

@4 why is it sad?

UKUncut have won the argument. An issue that no one took seriously until 2010 is now centre stage. HMRC and the Govt won’t find it so easy to brush it under the carpet.

I can’t see how winning the arguement and getting everyone on your side (irrespective of where they have come from) is ‘sad’

14 – It’s just not a terribly inspiring report though is it?

Lets take Vodafone. How do the PAC refer to this?

We also asked about another case, where the Department concluded a tax settlement of £1.25 billion with another large company, and again the Department cited taxpayer confidentiality as the reason for refusing to answer our questions. In particular:

The General Counsel and Solicitor said he could not comment on whether lawyers had advised that £1.25 billion was the correct settlement amount or whether the settlement included interest.[25]

The Permanent Secretary for Tax chose not to answer questions on why the company had been given five years to settle its tax liability without being charged interest, despite this information being put in the public domain by the company itself.[26]

It was ‘given’ five years because Vodafone denied there was any liability at all – a point of view that succeeded in the Special Commissioners, and again on appeal to the High Court. It’s lucky for HMRC that they settled when they did, because the latest publication from the ECJ makes it very clear that Cadbury Schweppes has blown the UK’s CFC rules out of the water. If the ECJ’s reasoned opinion had come before the settlement, Vodafone would almost certainly have refused to settle and HMRC would have got nothing.

As such, Vodafone weren’t paying a tax bill, they were settling a dispute. Which means that whether ‘interest’ was included is completely irrelevant. You only ‘get’ interest if you win a case. HMRC hadn’t.

In short, this wasn’t Vodafone refusing to pay a tax bill, it was Vodafone denying, rightly, that the tax bill was valid. When fairly basic stuff like this is so flawed it rather undermines your faith in the rest of the report.

It reveals how the tory govt is not that interested in paying down the budget quite as quickly as it claims because if it was it could knock £25 billion off the debt if it collected the tax due from the rich and corporations.

I can confirm that I consider the maintenance of the rule of law as of even greater significance than the return of the public finances to order.

“A report by the Public Accounts Committee today will state that HM Revenue and Customs failed to collect more than £25 billion in “unresolved tax bills” from major companies, after looking into lapses at the organisation.”

No, it doesn’t. It states that there’s £25 billion being argued about between HMRC and 2,700 companies.

And you know how we settle arguments about the law? Through the courts.

And the courts do take some time to work through such questions: as Vodafone itself showed.

“In short, this wasn’t Vodafone refusing to pay a tax bill, it was Vodafone denying, rightly, that the tax bill was valid”

Well I’m not familiar with the specifics of the vodaphone case so won’t comment on it, other than to say parliamentry comittes containing cross party MPs usually get matters more accurate than people endlessly repeating corporate PR. What is of concern is the report’s central conclusions:

1. That there is 25 billion in dispute – a not insignificant amount.
2. That in resolving these disputes HMRC have a cosy relationship with the companies they are investigating, with staff freuqently recieving hospitality.
3. That the companies are being given extended leeway and time to pay tax bills of a sort that small businesses and individuals are never given and are frequently threatened with imprisonment over.
4. That the officials and staff at HMRC have treated a parliamentry committee inquiry into the issue with contempt, failing to answer questions and providing misleading information to such an extent that the committe was only aware of controversy via the media.

And you don’t see a problem with this?

Doesn’t this remind you of another issue to do with a different industry? Where news international enjoyed a cosy relationship with the police that enabled it to get away with phone hacking for years. And another issue where conservatives such as yourself were claiming this was a non-issue right up until the dowler revalations. And where subsequently its turned out that several other highly illegal practices were going on.

Well I’m not familiar with the specifics of the vodaphone case so won’t comment on it, other than to say parliamentry comittes containing cross party MPs usually get matters more accurate than people endlessly repeating corporate PR.

I’ve read the judgements from all three hearings, plus the legal commentary on them (being a lawyer sucks sometimes). I honestly doubt that anyone on that committee has done the same – or they wouldn’t have made such basic errors.

That the companies are being given extended leeway and time to pay tax bills of a sort that small businesses and individuals are never given and are frequently threatened with imprisonment over.

The only two examples they give of this is where there has been litigation. It’s an allegation that totally misses the point – of course they are ‘given’ extended time to pay – there’s a dispute over whether they have to pay anything. Litigation takes time and costs money – and there’s no certainty as to the result.

HMRC are a state body – they aren’t infallible. That £25bn isn’t ‘tax avoidance’ – it’s where HMRC think that the law says one thing, and the companies think it says something else. On Vodafone, HMRC were wrong, and it was that ‘cosy’ relationship between them and Vodafone that enabled them to salvage anything at all. On Goldmans HMRC were right, and it was, according to PAC, their failure to follow their own guidelines that cost them money.

Is there a problem with that? Of course there is. It’s hardly a stretch for me to accept that state bodies are pretty useless at their jobs. I had to deal with HMRC a lot in the past, and they were almost uniformly useless. The merger of the IR with Customs was a bad idea, badly executed (cheers Gordon), and I’d love to see proper reform there.

“That the companies are being given extended leeway and time to pay tax bills of a sort that small businesses and individuals are never given and are frequently threatened with imprisonment over.”

What do you think should happen when a company (or an individual) disputes a tax bill in court?

That they should have to pay it then get it back if they win? Or that we let the case run its course and then they pay up, plus interest, if they lose?

The system we have is the latter. Please explain why you think it should be different.

I bet all crooks would like the chance to wine and dine the people who decide their guilt. Just shows once again how everything is stacked in favour of the rich elites.

We become more like a banana republic everyday. As usual we see the morally bankrupt Tim twins spinning for the rich and the elites. I have no faith in the rule of law anymore. The British legal system is a joke where the rich buy their justice from a judiciary that are both stupid and corrupt.

When the elite start talking about the rule of law you know they have gamed the system.

What is of concern is the report’s central conclusions:

1. That there is 25 billion in dispute – a not insignificant amount.

There’s no problem with saying that, because it is a fact that there is claimed to be £25bn in dispute. But some people are reading that as, “HMRC is owed £25bn” or “businesses have avoided £25bn”.

As in the OP, “A report by the Public Accounts Committee today will state that HM Revenue and Customs failed to collect more than £25 billion” – it isn’t true that the PAC stated that, nor is it true that is what HMRC “failed to collect” it. Or look at the tweets, “big firms have avoided massive £25bn in tax” – just blind retweets really, no fact-checking.

Here are the two mentions of £25 bn in the report:

HM Revenue & Customs (the Department) was seeking to resolve tax issues valued at over £25 billion with large companies, some of which included disputes over outstanding tax. …

At 31 March 2011, the Department was seeking to resolve over 2,700 issues with the biggest companies, including disputes over outstanding tax, with potential tax at stake of £25.5 billion.

Further to my comment @11, I sometimes wonder if people don’t link to what they’re talking about if it doesn’t actually say what they claim it says. But then I think no, surely people are honest.

The curious thing is that LibCon has (rightly) criticised others for being dishonest and/or inaccurate with figures.

@16

What I was meaning was this (and it’s a phrase I wish would become more of a cliché): correlation does not equal causation. UKUncut have done a lot of work to raise awareness for this – but is it certain that their actions and their actions alone have given a result? That’s why I say “sadly”. It’s only when the Daily Hate and the Torygraph get involved that certain people listen.

In this case (yes, here comes the cliché) the end justifies the means – but what if there were no means?

That was all I meant. Nothing else.

@24 – yes that was my reaction. But I the way I read this bit:

” tax issues valued at over £25 billion with large companies, some of which included disputes over outstanding tax. …”

was that only part of the 25 billion was in dispute. Meaning HMRC has failed to collect somewhere between £X and £25 billion, and I’d imagine the X is a significant amount.

To me the most damning conclusions are the cosy and corrupt relationship between HMRC and large companies, and the secrecy involved. Small businesses usually face the opposite – dealing with threatening letters and a litigation friendly department over trivial amounts. It’s this contrast which is a scandal and one that libertarians should be highlighting if they had any integrity at all rather than carrying on pretending large corporates are doing nothing wrong and it’s all lefties being naive.

Planeshift,

To me the most damning conclusions are the cosy and corrupt relationship between HMRC and large companies, and the secrecy involved. Small businesses usually face the opposite – dealing with threatening letters and a litigation friendly department over trivial amounts. It’s this contrast which is a scandal and one that libertarians should be highlighting if they had any integrity at all rather than carrying on pretending large corporates are doing nothing wrong and it’s all lefties being naive.

I’m very much inclined to agree with that. In addition, I said elsewhere (and here I think), before and on publication of the PAC report, that I think there is an issue of accountability / lack of scrutiny – taxpayers are entitled to confidentiality but we need to weigh that against genuine or legitimate scrutiny. Court cases are a means of doing that: there is a dispute about the rules between two parties, so the court hears both sides and makes a judgement.

Where we possibly part ways is about “pretending large corporates are doing nothing wrong”. If you take Vodafone for example, what has it done wrong? It seems to be that what it has ‘done wrong’ is not ‘pay what campaigners think Vodafone ought to pay’ (for whatever reason, although no-one AFAIK has answered Robin Levett’s question @1) – as opposed to ‘not pay what the rules say it should pay’.

Vodafone has appeared to pay what the rules say it should pay, which is perhaps why HMRC didn’t pursue the case further than it did. My specific point here – and the one I think ‘libertarians’ are making – is that campaigners are saying “Vodafone is evil and they should pay what we say” instead of saying “the rules ought to be changed so that companies like Vodafone will have to pay up”.

The silly thing is that there is / could be some common ground between pro-UK Uncut and ‘libertarians’, e.g. the latter sometimes ask “You want companies to pay more tax? How about LVT?”

@26. Planeshift: “To me the most damning conclusions are the cosy and corrupt relationship between HMRC and large companies, and the secrecy involved. Small businesses usually face the opposite – dealing with threatening letters and a litigation friendly department over trivial amounts. It’s this contrast which is a scandal and one that libertarians should be highlighting if they had any integrity at all rather than carrying on pretending large corporates are doing nothing wrong and it’s all lefties being naive.”

I am not a “libertarian” but I would split “the cosy and corrupt relationship between HMRC and large companies, and the secrecy involved” into three arguments.

I am very uncomfortable about HMRC staff socialising with staff of target companies to the degree suggested in some reports. That should start off as an internal disciplinary concern and if there is accuracy in the stories, then it becomes a public concern. That is a concern about corruption, not tax avoidance or tax regulation.

Secrecy works for the benefit of HMRC (on behalf of tax payers) as well as for the company that gets a deal. Company A may sign up for a deal that is advantageous in some way; or the deal may be disadvantageous to them. HMRC potentially benefits if Companies B and C are unaware of the settlement. Remember that HMRC and companies do deals to avoid litigation because both parties recognise that they might lose. Risk avoidance is part of the game.

HMRC should deal with small and large companies with equal fairness. I cannot and will not defend HMRC if it tries to collect small amounts of money from companies that never got off the ground. If Crap Charlieman Builders initiates a housing development, I guarantee that Crap Charlieman Builders will owe HMRC money for the building materials on the first house that was uncompleted (and naturally, for which there was no income). If Crap Charlieman Deliveries was a slow payer after five years of relative success, HMRC would have grounds to chase CCD. But having a legal department may only make it cheap to deliver legal threats. Court presence is expensive, so even for CCD it makes sense if HMRC cuts a deal.

I am surprised that nobody has pointed to this Radio 4 interview this morning (text as well as audio):
http://news.bbc.co.uk/today/hi/today/newsid_9665000/9665189.stm

Margaret Hodge acknowledges to the interviewer that some information came from Private Eye and some from a whistleblower.

@22 – Competent people in the tax office and a simplified tax code which means court is needed in a far smaller percentage of cases.

But no, you oppose competent people in public service, right. And I’m sure you love ways to dodge tax too. All for you, and all for you.

The Civil Service Commissioners are investigating other claims made by another whistleblower against Dave Hartnett. If you don’t believe me ring up the Commissioners and ask.