Blog Archives

Government ‘sweetheart’ tax deals and yet another revolving door reward for failure

Yeah, we’re all in this together? 

So said the reader who recommended the Guardian article by Rajeev Syal which reveals the scale of the government’s “sweetheart” tax deals – individual secret agreements drawn up between tax officials and corporations to settle disputes.

Another whistleblower revelation

A leaked document sent by Dave Hartnett, the former head of tax at HM Revenue and Customs (HMRC), to David Gauke, the exchequer secretary at the Treasury, discloses a figure of £4.5bn for four settlements.

Conflict of interest: the government’s civil servant too close to the corporate world

dave hartnettTwo years ago the Telegraph and others reported that Dave Hartnett, during his service as ‘permanent secretary for tax’ at HM Revenue & Customs, was entertained 107 times by some of the UK’s biggest banks.

These included law firms and accountancy firms and other corporates, amongst them, Goldman Sachs, JP Morgan, Ernst & Young, KPMG, PriceWaterhouse Coopers and Deloitte.

Revolving door

In January he was hired by HSBC to help to enforce the highest standards in dealing with international money transfers.

The leaked document describes deals in excess of £1bn as “not uncommon”.

The disclosures about the multibillion-pound scale of the government’s deals come from a seven-page memo sent by Hartnett in December 2011 as he asked for public support from Gauke in the face of growing criticism in the media and parliament.

Margaret Hodge, the chair of the Commons public accounts committee, said: “If we got £4.5bn in, how much did we not get? That is what taxpayers will want to know, and I’ll be raising this with HMRC through the committee.

Whistleblower protected? No: treated like serious criminal

Separate documents disclosed in the Guardian show that tax officials used intrusive investigative powers designed to help them catch serious criminals to try to prove that the whistleblower who uncovered one of the first sweetheart deals, involving Goldman Sachs, had spoken to the Guardian.

Read more about HMRC’s draconian action against its whistleblower and deals with Vodafone and Goldman Sachs here: http://www.guardian.co.uk/politics/2013/apr/29/sweetheart-tax-deals

 

Government has never tried to recover legal costs from promoters of tax avoidance schemes and continues to award them taxpayer funded contracts

Despite the evidence of fraudulent schemes, no major accountancy firm has ever been disciplined by any professional accountancy body

Professor Prem Sikka writes that Her Majesty’s Revenue and Customs (HMRC) is investigating some 41,000 tax avoidance schemes, but there is still no investigation of the industry that designs and markets aggressive tax avoidance schemes . . .

Now the public accounts committee (PAC) chair Margaret Hodge has PwC, Ernst & Young, KPMG and Deloitte in her sights. The PAC should investigate the role of these firms in organised tax avoidance. An earlier internal HMRC study estimated that these four firms “were behind almost half of all known avoidance schemes” . . .

Despite the evidence, no accountancy firm has ever been disciplined by any professional accountancy body and despite spending millions of pounds to quash predatory schemes, the UK Treasury has never sought to recover the legal costs from the promoters of the schemes. Instead, the big accountancy firms continue to receive taxpayer funded contracts . . .

No government will be able to effectively tackle tax avoidance without shackling the designers and enablers.

Read the whole article here: http://www.guardian.co.uk/commentisfree/2012/dec/08/predatory-practices-accountancy-firms

 

Another whistleblower: Osita Mba, the country is in your debt

Private Eye has repeatedly detailed the shortcomings of HMRC at length but earlier this year an ‘insider’, Osita Mba, a tax solicitor at HMRC, testified to two parliamentary committees that the Permanent Secretary for Tax, Dave Hartnett, excused Goldman Sachs from paying £10million in tax owed. 

Mba, who trained as a barrister in Nigeria and completed his master’s degree at Oxford, worked in the personal tax litigation team from February 2007 until November last year. He wrote to Amyas Morse, the auditor general of the National Audit Office, in March, outlining his concerns over the deal, but the subsequent NAO report did not name Goldman Sachs. 

In October, Mba sent a detailed submission to the parliamentary committees claiming that Hartnett had misled the committee over his role in the Goldman Sachs deal. Hartnett has denied deliberately misleading them – but is to retire . . . 

Despite speaking out in the public interest and following whistleblowing protocols, it was reported earlier this month that Osita has been threatened with an internal HMRC investigation. 

On the 16th came better news: officials at Revenue and Customs are reconsidering disciplinary procedures against him and the “fact-finding” investigation has been suspended. 

As the Nigeria Village website says: 

“Here is one man doing all of us proud! He is not being hounded for corruption, but for trying to stop corruption, not in Nigeria, but in good old Britain!

 

Verdict: Promote him!