A few weeks ago HMRC sent 150 of its "finest" in to one large listed UK company. This was revealed by "acting" HMRC Chairman Dave Hartnett, during a Q&A session with the Public Accounts Committee about corporation tax issues.
"When I meet the chairman of a public company it is to look him straight in the eye to explain why and how we are conducting an investigation. That is why I told the chairman of a public company not many weeks ago that we are putting 150 tax inspectors into his company."
Hartnett went on to say that this investigation was one of "half a dozen" that he had become personally involved in over the past two years. However, the "flash mobbing" of one company with 150 inspectors is a significant political step on the part of HMRC.
Hartnett said that HMRC was encountering new and aggressive avoidance techniques. He explained that there were advisers who were designing bespoke, niche avoidance schemes to business, and that a pattern was emerging where companies would move brands into an offshore company and then pay for the use of the brand in order to avoid tax.
Now here is where I have a problem with the attitude of Hartnett, HMRC and the government.
There is nothing wrong with tax avoidance!
When I was being taught the basics of tax, back in the mid 1980's, our lecturer made sure that we clearly understood the difference between tax evasion and tax avoidance.
- Evasion, eg under declaring or hiding revenue, is illegal
- Avoidance, eg making use of your legitimate allowances, is legal
The fact that Hartnett and his political masters seek to blur that very clear distinction, in their efforts to politicise HMRC, fills me with loathing and contempt.
HMRC's role is to collect tax in the most efficient and cost effective manner possible, it is not here to pass commentary on the legitimate efforts of people to avoid paying tax.
Unfortunately, those running HMRC are now kowtowing to Brown and his ilk, and their poltical agenda, in the hope of receiving rewards such as gongs and defined benefit pension schemes.
A politicised HMRC, ie one that has become the tool of the state, is something that is to resisted at all costs.
Simplify the tax system, and the costs of running HMRC and time and effort expended by people in trying to reduce their tax bills will fall.
Tax does have to be taxing.
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