Andrew Goodall

Christian Aid doorsteps Taxation awards and posts interviews on YouTube

Several guests at last month's LexisNexis Taxation Awards found themselves featured on YouTube, answering questions put to them by Christian Aid campaigners as they arrived at the event. Christian Aid has lobbied the big four accountancy firms in its campaign for country-based tax reporting. The charity invited many of the guests arriving at London's Park Lane Hilton to answer questions about corporate "tax dodging" which, it claims, costs developing countries $160bn a year.

The charity declared that "while the accountancy industry celebrated its achievements in tax-bill-minimisation, we held our own awards ceremony outside". The "winners" included Barclays, which the charity described as "tax haven enthusiast of the year". Christian Aid posted two videos on YouTube, featuring its "alternative" tax awards and the filmed reaction of several guests to questions put to them outside the Hilton. While some respondents were clearly in the "no comment" camp, others appeared more sympathetic. One said: "I don't know where you get your figures from, but if that's correct it's not going to make anyone feel very good."

"The majority of people we spoke to were positive about our campaign," the charity said. In this week's issue of Tolley's Practical Tax newsletter Madeleine Brand, a chartered tax adviser and Christian Aid volunteer, calls on tax advisers to support the charity's Big Tax Return campaign.**

See related posts in the Christian Aid category of this blog. The current issue of Tolley's Practical Tax newsletter ( 5 June) has more on this and other very recent developments including:

• HMRC discusses regulation of tax agents and possible penalties for "poor behaviour"
• Finance Bill "aggravates" long and complex tax code, says Tax Faculty
• OECD watching havens "like a hawk"
• Tax authorities agree "new co-operation" plan
• Chartered Institute of Taxation launches green tax report

** TPT reported on 22 May, having invited each of the big four firms for their reaction to Christian Aid's campaign, that:

PricewaterhouseCoopers said in a statement that it had "led the profession" in promoting more transparency in tax and wider corporate reporting. "PwC has met with Christian Aid to discuss our shared interest in improving corporate reporting of tax information and indeed subsequently continued this dialogue in writing," said Barry Marshall, the firm's UK head of tax. "We have a common interest to continue to improve corporate reporting of tax information. However we do not believe that the introduction of the kind of country-based reporting proposed by this campaign would meet this ambition." PwC added that its total tax contribution (TTC) framework was "designed to improve communication and understanding of a company's tax position" and "gaining traction and support around the world". The firm would "continue to support its development, in conjunction with our corporate reporting colleagues, to continually improve business reporting generally". The firm's website promotes TTC in the light of increasing scrutiny of the amount of tax paid by large businesses which, it adds, "pay considerably more in tax than it might first appear". It suggests that "a business's tax contribution and its tax strategy should be looked at from the point of view of all the taxes it bears and collects" ...

A KPMG spokesperson told TPT: "We have received a large volume of mail from Christian Aid supporters and we are listening to what they have to say." Ernst & Young told TPT: "We are aware of the campaign but are not commenting further." Deloitte declined to comment.

MPs’ expenses: a statement from Cafod director Chris Bain

Cafod has published on its website a detailed statement from Cafod director Chris Bain in response to a recent Daily Telegraph article about the expenses of Paul Goggins MP. His statement does not appear to have been picked up by the Telegraph or any other major national paper as I write. Why I am linking to this? As a taxpayer and tax journalist I am, as I have said, outraged by the behaviour of some of our MPs. But it is of course important, especially in the present atmosphere, that MPs and others who may be cited in news stories have the opportunity to explain their position and, where necessary, set the record straight. As a Cafod schools volunteer I was particularly interested in this story. Chris Bain has set out his position and concluded by saying: "I hope that the above explains that Paul Goggins and I acted in good faith and that we will make good anything which is considered inappropriate."

HMRC’s tax guidance for MPs and ministers

David Grossman at the BBC's Newsnight seems to have his finger on the MPs' tax and expenses button, as Mark Lee mentioned here. In this video, posted last week, Grossman illustrated how some MPs have been able to save capital gains tax on their second homes. The CGT exemption is set out clearly in the legislation, and HMRC guidance to MPs (published by Newsnight) includes this statement:

"If you have more than one residence you can choose which one is to qualify for the exemption from capital gains tax. It does not have to be your 'home' for the purposes of [the MPs' additional costs allowance] and travel."

HMRC adds that:

"You can change your choice at a later date ..."

All very helpful, well known to tax advisers and hardly controversial until now. Suddenly the rules seem rather too generous, and people are starting to ask why.

On expenses, the HMRC guidance also seems perfectly clear. A list of items that are not allowed as a deduction includes:

"Accountancy fees incurred in the preparation of the self assessment tax return or related expenses claims."

That's the tax position. The really interesting question, though, is why on earth the taxpayer should be expected to pay a minister's fees for personal tax advice. David Cameron has said, according the Telegraph:

"It beggars belief. If any Conservative MP has used an accountant to do their personal tax return and has claimed that off the taxpayer I will make them pay that money back. They ought to pay that money back, it is completely wrong."

Expenses, personal tax advice and vilification of MPs

I was back at work yesterday after a fortnight's holiday that began on day two of the MPs' expenses scandal as revealed by the Daily Telegraph. Now I need another holiday. I am outraged, of course, by the behaviour of some of our MPs, and I worry about the effect of the scandal on our already weak democracy. If this "political earthquake" leads to more transparency and accountability, then some good will have come out of it. Scandal is the right word – even Jack Straw, the justice secretary, used it several times in a radio interview yesterday.

But there are limits and it would be completely wrong and dangerous to vilify politicians generally. As Joan Smith as pointed out, most of our elected representatives have not done "anything terrible". The danger is that "in this uniquely poisonous atmosphere, years of conscientious public service count for nothing".

There are a few important tax angles here, with possible implications for all taxpayers. I trust we can expect HM Revenue and Customs to conduct a thorough investigation into MPs' tax returns – including those of government ministers whose fees for personal tax advice have been funded by the taxpayer. More on this soon. But I'm going to see MPs' scrutiny of the current Finance Bill in a new light, I think.

Tax is too important to be left to the professionals

Alan Rusbridger of the Guardian and Ian Hislop of Private Eye have told a committee of MPs that the "chilling" costs of legal action are "increasingly deterring investigative journalism," the Guardian has reported. The press is

"growing wary of running controversial stories about large companies and rich individuals because of the potential cost of dealing with legal action".

Two figures illustrate the challenge facing journalists investigating the scale of tax evasion and avoidance and the response of governments and international institutions like the OECD. The Guardian report said:

"Rusbridger said that the Guardian had spent £90,000 on pre-publication legal work to make sure [its recent "Tax Gap" series] on tax avoidance was free of errors."

And the Press Gazette has reported that:

"Rusbridger said it would cost about £100,000 to appeal against the [recent High Court injunction banning the paper from publishing leaked memos relating to the tax affairs of Barclays Bank]."

A Guardian editorial pointed out that the vast majority of journalists do not have the resources to tackle the complexities of tax law, and that the resulting lack of scrutiny means that large accountancy firms and powerful voices from business have a "disproportionate share of influence" on government.

No public interest issue should be too complex to be above investigation by independent media. The Chartered Institute of Taxation welcomed the "unprecedented level of informed coverage of tax issues" in the Guardian's Tax Gap series. But the debate is hindered, as the Guardian editorial explained, by a knowledge gap between mainstream media and those with the specialist knowledge, few of whom seem prepared to engage.

Tax is high on the political agenda. Informed public debate of tax issues is more important now than ever. But this knowledge gap, added to the "chill wind" of our privacy and libel laws, is looking bad for taxpayers and bad for democracy.

The ICAEW, tax avoidance and the quality of public debate

Having noted Richard Murphy's "world first" question to the prime minister at the G20 summit, I am intrigued by two developments in the past week. The second – see below – concerns the conduct of public debate about tax evasion and avoidance.

Gordon Brown wrote on Maundy Thursday to all the UK's "tax havens" and "offshore financial centres" to warn them that they must deliver on their commitments to the OECD's standards on tax information exchange, aimed at tackling tax evasion. He also indicated in the letters to the heads of government of Jersey, the Cayman Islands and others that international efforts to counter "harmful" tax practices will begin to refocus on "the issue of tax avoidance".

This raises several questions, including whether and how the 80-plus countries on the OECD's white and grey lists (there is now not a single country on the black list) could ever agree on a definition of avoidance (which is – by definition, actually – not illegal). Having said that, governments have a duty to protect tax revenues from attempts to undermine the clear intention of tax legislation by means of structured avoidance.

This is something that the UK's leading professional bodies seem to recognise – they would be in trouble if they didn't. For example, the Institute of Chartered Accountants in England and Wales (ICAEW) said nine years ago, in its paper "Towards a better tax system", that:

"The government has a legitimate interest in maintaining tax revenues. This means it will from time to time need to repair legislation which has failed to capture the necessary tax revenues."

The ICAEW cited this paper in its recent submission, ahead of next week's budget, calling on the UK government not to put "unnecessary burdens and costs on business through taxation policy at this critical time". And in that submission it said, in a discussion on the need to improve tax policy formation, that:

"The ICAEW accepts that there are times when the government may need to act swiftly and that consultation is not always advisable, for example where measures need to be announced to counter known tax avoidance schemes."

This brings me to the second development. Richard Murphy has taken the absence of any reference to tax havens in this ICAEW submission to mean that the ICAEW is saying "do not go near tax havens". He claimed – despite what the ICAEW says about avoidance – that the ICAEW is also saying "do not tackle evasion ... please ignore avoidance," among other things. He concluded that the institute's submission was "thuggish, blatantly partisan, anti-democratic and clearly anti-social ..."

Mark Lee, a former chairman of the ICAEW's Tax Faculty who has not been afraid of voicing his support for much of what Richard Murphy has said and done, has protested that to point out that the budget submission does not focus on revenue loss through tax havens is one thing, but Richard Murphy's assessment of the ICAEW's real message is "without foundation".

Mark Lee is right. In my view the role of the professional bodies in relation to the public interest – as well as the impact, particularly on developing countries, of the activities of some (not all) of their members in tax havens – is a matter for public debate. But that debate will be a very poor one, likely to alienate many people including supporters of "tax justice" who have something worthwhile to say, if it is conducted in an aggressive and brutish manner.