The Treasury sub-committee is looking for submissions before the end of May into whether HMRC’s approach to conducting tax enquiries, resolving tax disputes and determining the amount of tax to be paid are fair and even handed.
MPs, led by chair John Mann, want to address the perception that tax inspectors throw the book at small businesses and individuals but go soft on large corporates. Mann has been extremely critical of offshore.
In January, tax barrister Jolyon Maughan released a recording of a then-senior HMRC officer speaking in 2015, saying: “I’ve heard from the Treasury; the Treasury didn’t want us to be too hard on Amazon.”
Commenting on the secret recording, Maughan said in his blog: “I have looked at the evidence in the public domain concerned [with] how HMRC behaves towards multinationals and I have concluded that it does not make sense.”
The committee is also looking at the effectiveness of HMRC’s anti-tax evasion measures and the use of UK dependencies and territories.
MPs to ‘find what they want to find’
Commenting on the fresh committee inquiries, James Quarmby, tax and private wealth partner at lawyers Stephenson Harwood, told International Adviser: “I suspect the review is simply cover for the MPs to find what they want to find, ergo that we are being taken advantage of by large tech firms and that there should be more harsh treatment for those involved in unacceptable avoidance or evasion.
“The EU has already signalled its intent to introduce a turnover tax for large tech, although the challenges in introducing this are immense, especially in respect of the effect of existing double taxation treaties.
“It is unlikely that the penalties for offshore evasion could be any harsher – we already have strict liability criminal offences for any under-declaration of tax exceeding £25,000 from offshore assets plus a criminal offence for advisers who ‘fail to prevent’ tax evasion plus civil penalties on any ‘enabler’ who facilitate unsuccessful (but lawful) tax planning.
“Arguably, the government has already overreacted to a problem which is actually not that large. The tax gap is the lowest is has ever been and the amount attributable to offshore evasion is pretty small. When compared to the evasion from domestic activities it is a drop in the bucket, so further attention to the domestic problem, rather than obsessing about offshore, is probably welcome.”
Quarmby estimates £6bn (€6.8bn $8.44bn) of the tax gap can be attributed to offshore tax evasion.
