Friday 26 April 2013

PAC Talks Bollocks Again


I see that PAC has distinguished itself again by lashing out at the accounting profession, in petulant frustration at the fact that people and companies seek to arrange their financial affairs in such a manner so as to minimise their tax burden.

The BBC reports that PAC wants to ban external accountants working inside government, to stop them telling clients about tax loopholes they have found.

Errmm, isn't this in fact a practice that is proactively encouraged by HMRC and the Treasury?

Bill Dodwell, head of tax policy at Deloitte, is quoted by Accountancy Live:
"We have seconded staff to the Treasury at their request. "
It should be noted that HMRC are no slouches in recruiting from the private sector, eg HMRC recently appointed Volker Beckers (ex CEO of RWE npower, a company that paid no tax for 2009-2011) as an NED.

On a similar point, have not past HMRC senior directors on leaving HMRC joined the private sector eg Hartnett joining HSBC? HSBC being the company that was fined $1.9BN for various "issues". Therefore will any ban on private sector people working with/for HMRC cover both "sides" of the revolving door?

MPs are whining that accountants were being seconded to work in the government to advise on changes to tax law, but using the position to glean inside knowledge and tell businesses how to avoid tax.

This criticism by MPs is rather "ironic" given that there are quite a few of them who use accountants themselves to deal with their trusts and financial affairs in a tax efficient manner.

Committee chairwoman Margaret Hodge (who, by happenstance, is in the top 20 of the UK's richest MP's and is worth around £18M) said the practice represented a "ridiculous conflict of interest":
"The large accountancy firms are in a powerful position in the tax world and have an unhealthily cosy relationship with government."
Cough, ermm Margaret...Stemcor!

PAC are also worried about the fact that HMRC are outnumbered by well-resourced accountancy firms in key areas, such as businesses transferring their profits overseas in order to pay less tax.

Errmm, two things here:

1 Given that HMRC is being restructured and staffing levels cut back, how is this a surprise?

2 Regarding offshoring of profits etc..Mapeley!

I leave the final word to HMT
"The analysis and conclusions in the PAC report bear almost no resemblance to reality."

Views and comments, as ever, are always welcome.

Tax does have to be taxing.

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8 comments:

  1. Aren't the politicians, HMRC top level management/directors and the top people in the Big 4 all as bad as one another?

    They don't give a monkey's uncle for the rest of us.

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  2. As often seems to be the case these days, I find myself agreeing with Ken but for different reasons (no doubt this still makes me a shill to some). On balance (not something that's generally held in high regards hereabouts, admittedly), I think the movement of people back and forwards is probably a good thing.

    However, the main argument Ken puts forward is entirely circular:

    Errmm, isn't this in fact a practice that is proactively encouraged by HMRC and the Treasury?"

    In other words, because it's something that HMRC and the Treasury currently do, the PAC shouldn't be telling them not to do it.

    It's a little like saying that, just because tax avoidance isn't illegal, no steps should ever be taken to make any avoidance scheme illegal. Now where have I heard something like that before...?

    As for Hodge, I've no knowledge of her tax affairs but even if we were to assume that she's into tax evasion, that still wouldn't be the basis of a valid argument against this proposal. The fact that someone is a hypocrite may shed light on their morals but it doesn't mean that any particular thing they say is wrong.

    Stew G

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  3. Well, never though I would find myself edging towards Stew G's point of view, however, I do think that Ken has shot himself in the foot over this.

    He has turned a positive into a negative and in the process detracts from the central point. It is not illegal, but it is immoral and the practice is as bad as any form of lobbying. None of this should be a surprise to those who consider the main stream media to be nothing but a layer within the smog of smoke and mirrors that exists around the public/private sector interface.

    Bashing Margaret Hodge is merely tapping at a closed door, the system has her where she is, we however should take encouragement for that as she makes Amyas Morse look like a poorly folded paper napkin in a breeze.

    As for the HMT response, absurd just about sums up HMT's attitude to the Revenue in the round. HMT should be assisting HMRC in protecting public/taxpayers/customers money, not facilitating its free movement offshore.

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    Replies
    1. Agree entiely with Stew G and Anonymous26 April 2013 22:49 on this one.

      I have no problem with business campaigning for lower tax rates or changes to allowances, reliefs etc but exploiting privileged access to HMRC so that your fee-paying clients can dodge tax while the great unwashed pay their taxes in full is beyond the pale and will eventually come to bite even those who benefit from the avoidance in their collective backsides. At the very least I would think this sort of thing violates EU competition rules as it effectively gives the Big 4 accountancy firms a built in advantage in bidding for tax work from business over their smaller and less privileged clients. This sort of gaming of the system of government to obtain special tax treatment is typical of all 'Bourbon' styles of administration down the years. If people want to know what happens to a society when the 'aristocratic' elite are exempt from all dues while the poor pay all the taxes then look no further than what happened in Paris on July 14 1789.

      Delete
  4. It would be interesting to discover what breaches of the Official Secrets Act may have occurred, assuming that these "infiltators" or "5th columnists" have signed it and have been suitably vetted for their access to details requiring various levels of vetting depending on the perceived damage that the loss and/or misuse(hah) of said details could cause.

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  5. Accountant professional defends the accountancy profession *shocker*

    I enjoy reading the website, and often agree from the inside, but the hypocrisy whereby you criticise (correctly in my opinion) the Mapeley issues, but then act as if accountants have nothing to do with it is amusing. Who do you think organised their affairs?

    In stating '...people and companies seek to arrange their financial affairs in such a manner so as to minimise their tax burden.' you sum up the problem. Accountants seem to consider themselves (too often, anyway) as some sort of Robin Hood, saving the poor companies from the bad tax man.

    That isn't the case at all. The reality being that large businesses are paying much less than most 'normal thinking' people would consider appropriate... aided and abetted by accountancy firms chasing the cash in an immoral manner.

    Clearly not all accountants are to blame, just as not all the top HMRC management are total fools, but there is a middle ground- the fact the rules allow avoidance doesn't make it right (not to occupy the moral high ground anyway).

    What is laughable with the PAC moaning, though, is that much of the issue could be removed if the tax laws were simplified and loopholes closed, which is all in the hands of Parliament. There would be less avoidance and less need for quiver-ladened accountants..... win-win.

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  6. While we have "The Bullingdon Mob" looking after our interests then very little will change. The only problem is that the alternative is no different.
    Their strings are pulled by hidden interests for whom the PAC is of little significance.

    Do some basic research around the Caroll Trust if you are sufficiently interested

    http://carrolltrustcase.com/fraud/cayman-islands-bvi-tax-havens-criminal-parallel-trust-biggest-offshore-tax-evasion-case/

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  7. Charity begins at home!

    Sunday Times article discusses an interesting topic

    http://www.thesundaytimes.co.uk/sto/news/uk_news/National/article1252140.ece?CMP=OTH-gnws-standard-2013_04_27

    Now who, in the UK, adminsters Tax in relation to charities and offshore trusts?

    Go on HMRC, trump this one, oh yes, it was the Charity Commissioners responsibility, any cross-over, anywhere? Any common denominators?

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