Dave Hartnett, permanent secretary for tax for Revenue & Customs, can't seem to resist playing politics.
The Treasury expects to collect only 30% of the potential yield from the new 50p tax rate. However, Hartnett is quoted in the FT as saying:
"For HMRC [the Revenue] a 70% attrition rate or tax gap in respect of the 50% rate would not be acceptable.
We are keeping such schemes under very close scrutiny and where such schemes are seen to work technically, we will not hesitate to go to our ministers to ask for a change to the legislation."
Since when was it HMRC's role to dictate to parliament what changes should be made to legislation already passed by parliament?
Tax does have to be taxing.
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"Since when was it HMRC's role to dictate to parliament"
ReplyDeleteI'm not one to defend Hartnett but didn't you quote him as saying "we will not hesitate to go to our ministers to ask for a change to the legislation". That means to make a request. Dictate means to command. There is a very clear difference.
As parliament is riddled with folk who use tax havens and non-domicile status, they can probably 'ask' all they like...
ReplyDeleteI can't make the point about the ridiculous use of the word "dictate" any better than the first commenter.
ReplyDeleteTo restate the question posed in the blog in terms of what Hartnett actually said: since when has it been the role of civil servants to ask ministers to change legislation?
The answer is erm, always, pretty much. In just about any system of government I can think of, the executive employs advisers whose job is, well, to advise. Under a constitution like ours, the elected representatives have the final say on legislative changes, but it's pretty obvious that they can only do this based on the advice of the people they employ who are specialise in the laws in question and know about the challenges involved in the administration of the system. Do you expect MPs, or even ministers, to know the details, ramifications and loopholes of every law? C'mon - that lot can't even do their own tax returns! They surely can't be expected to know when to change detailed bits of legislation and write it themselves. When would they find the time to do their expense claims?
As an aside, the government don't always listen to what these advisers say - look at the tax credits mechanism! - but that's another matter...
Having said all that, I agree (partly) that Hartnett is sailing close to the wind with respect to playing politics. If he were to tell the press that he was going to recommend a specific bit of legislation to address a specific problem, I would agree that it would be dubious. By seeking to influence public opinion in such circumstances he'd potentially be unduly influencing the democratic process of lawmaking. (There may well be examples of him having done just that, and depending on the circumstances I may well agree that he is/was unacceptably playing politics).
In the quotes you've set out, however, he's merely explaining what part of HMRC's job is: look at avoidance schemes (*) and if they do work advise the government on how to stop them working. (What he doesn't talk about in the quote you've included is that another part of HMRC's job is to challenge schemes that they think don't think work - i.e. which aren't within the letter of the law.)
(* - by which I mean the usual definition of avoidance schemes: arrangements which seek to produce a tax result different from the one intended by parliament given the underlying economic circumstances.)