Sweetheart deals and meaningful accountability at HMRC

Buried in the EU Commission's State Aid Press Release was this invitation to other Member States to share in Ireland's prospective €13bn (plus interest) tax bonanza from Apple.

Italy already has. Apple handed over €318m last year, it would seem. Spain, Austria and France have now signalled that they will look again at whether Apple has paid the right amount of tax. This is no surprise. Even without the Commission's prompt, given how Apple's operations are structured, if it owes hundreds of millions in Italy, you would expect it to owe equivalent sums to member states across the EU, including here.

But there's been no public signal we will look again. This will - and should - give rise afresh to the question whether HMRC is acting in the public interest.

I ask this question now because later this month we will hear how HMRC proposes to answer it.

Back in February 2012, following widespread concerns that HMRC was doing sweetheart deals, the Public Accounts Committee noted:

Governance procedures have lacked the independence and transparency needed to provide sufficient assurance to Parliament. Tax settlements with large companies are inevitably complex and involve the exercise of judgement. Parliament needs assurance that these settlements are appropriate and good value for the taxpayer. The Committee welcomes the Department’s proposals to introduce an independent assessor, or assessors, to sit alongside Commissioners, who would carry out independent review of settlement proposals.

Because we treat taxpayer confidentiality as sacrosanct, Parliament lacks the ability to scrutinise whether HMRC is acting in the public interest.

What was then proposed was that we would appoint a "Tax Assurance Commissioner" who would act independently of HMRC. A People's - to use the nomenclature du jour - Champion who would zealously guard over the public interest and fearlessly disclose naughtinesses at HMRC.

The appointee was Edward Troup, and here's what he said in his Tax Assurance Commissioners' report published just a couple of months ago.

That's all reassuring. Until you remember it was written five months after he was also given the job of Executive Chair and Permanent Secretary of HMRC. For the last few months he has, in effect, been scrutinising himself. And prior to that - at least it might be seen in this way - he spent several years as gamekeeper whilst auditioning for the job as Chief Poacher.

I'm not advancing an assertion that Edward has done those jobs otherwise than well. But when it comes to appearances? It's quite fantastically unattractive.

In an age of enfeebled nation states and mighty corporates - remember "the tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market" - democracy demands meaningful scrutiny of these hugely valuable deals done behind locked doors.

I've addressed this problem before.

I wrote:

We can generate a dozen different layers of assurance. But if we populate them with individuals with a cookie cutter outlook the result will neither look like – nor represent – good scrutiny. The reality is that few people move into HMRC from the outside world – the traffic is almost all the other way – and the pool of Tax Commissioners is drawn almost exclusively from HMRC and the tax profession. I am aware of no-one who occupies a role of strategic importance in the process of approving deals whose background is such as to reassure the public that they are likely to provide independently minded challenge.

Let's hope we end up with real scrutiny. Scrutiny that's meaningful. That the public can have confidence in. That's in everyone's interests. Because if we can't have confidence that big taxpayers are being made to pay the tax they owe, we're bound to wonder whether we should bother.

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