Labour is this week expected to unveil its plans to reform HM Revenue and Customs, including a promise to bring greater scrutiny and accountability, as well as more targeted resources, to the UK’s much-criticised tax collecting agency.
The shadow chancellor, John McDonnell, who promised a review of HMRC a year ago, is likely to set out plans under a Labour government for a new supervisory board of stakeholders to monitor the agency’s conduct and policies.
Supporters believe such a move would go a long way to restoring public trust in HMRC after years of whistleblower revelations created widespread distrust.
In the wake of the Panama Papers, LuxLeaks and other tax scandals, HMRC bosses have been summoned before parliamentary committees, but have often hidden behind the duty of confidentiality owed to taxpayers.
Labour is likely to propose that senior HMRC executives appear before a new supervisory board for regular scrutiny sessions, held in public, in a bid to restore trust.
HMRC’s enthusiasm for tackling the most complex tax avoidance schemes used by multinationals such as Google, Apple, Vodafone and Amazon has been questioned in recent years.
Earlier this year, the tax office was fiercely criticised for reaching a £130m settlement with Google over 10 years of disputed tax bills. McDonnell said it was “derisory”.
Labour is expected to call for a new HMRC supervisory board that would have powers to view, in private, tax settlements and deals struck with international corporations.
The new board could also have powers to monitor how tax inspectors decided whether to prosecute tax evaders in the criminal courts – though Labour is expected to stop short of recommending such a scrutiny body have access to confidential information on individual taxpayers.
The board could include representatives of small- and medium-sized businesses, many of whom have grown increasingly concerned that they are being chased for every penny of tax while HMRC is going soft on big international firms. Past tax inspectors and representatives of tax fairness campaign groups may also be given a voice under Labour plans.
HMRC already has a corporate-style board, where the lead non-executive is Ian Barlow, a former senior partner at KPMG who sits on the boards of several large groups including the estate agent Foxtons and medical devices group Smith & Nephew.
Barlow has also previously sat on the board of Candy & Candy, the firm founded by property development tycoons Nick and Christian Candy.
Other HMRC non-executives are Joanna Baldwin, a part-time director at Aviva France, Mervyn Walker, a former director of mining group Anglo American, Rolls-Royce chief information officer Simon Ricketts, and former PricewaterhouseCoopers tax partner John Whiting.
HMRC also has a number of other advisory committees, which are dominated by executives from multinational corporations.
Last year, one of the UK’s top tax barristers claimed that Britain’s tax policy was effectively dictated by companies and not ministers.
Philip Baker QC said policymakers and tax experts had learned over recent decades that the mobility of companies and jobs meant there was “no question [countries] have to be competitive to survive”. As a consequence, governments had to provide the tax policies that international corporations wanted.
“I don’t think in the last 20 years or so one can say that governments have driven corporation tax policy,” he said. “It’s the large companies that have driven the direction of corporate tax policy.”
