HMRC spending on corporation tax avoidance/evasion enquiries

The request was partially successful.

Dear Her Majesty’s Treasury,

Please provide information relating to the following:

1) (i) The full monetary figure that has been spent by HM Revenue and Customs (HMRC), in each of the last 10 years, auditing corporations [1] that have been subject to a public inquiry on tax evasion/avoidance.

(ii) how many full-time equivalent staff worked on those tasks in those years.

2) Is HMRC and it's commissioners accountable to Parliament? or any other institution, public body or external organisation? Please provide details of all external scrutiny mechanism names (committee names, e.g. Public Accounts Committee, Departmental Select Committee etc.), the period covered by each panel/committee, and the members composing each panel/committee.

3) Does taxpayer confidentiality always overrule Parliamentary privilege.

4) What checks and balances:

i) have been in place
ii) are currently in place
iii) will be in place

to secure efficient expenditure of public finances by HMRC.

5) Information on how (4), particularly parts (ii) and (iii) guarantee (or not guarantee) value for money for the taxpayer.

6) Who is responsible for starting a tax avoidance/evasion enquiry against a particular corporation. Is it the government, a select committee, HMRC or some other entity.

7) i) Does the Treasury become aware of HMRC tax enquiries prior to their commencement (through HMRC or otherwise)

ii) How does the Treasury allocate funding (in terms of value for money for the taxpayer) to HMRC without being aware of at least an estimated figure of the costs associated with conducting these enquiries.

iii) In line with 7(ii) how does the Treasury allocate efficient and cost effective spending figures/targets (through a balanced budget or otherwise) without having any estimated figure (of conducting these enquiries) available.

iv) is HMRC offered a 'blank cheque' (so to speak) at the beginning of each financial year?

v) who is responsible for scrutinising HMRC's spending?

Yours faithfully,

Mr navartne

[1] If three companies/corporations (e.g: corporation A, B, C) were subject to public inquiries, please provide the sum total of the figure, as opposed to the figure spent per corporation.

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FOI Requests, HM Treasury

1 Attachment

Dear Mr Navartne,

 

Please find attached our reply to your Freedom of Information request
dated 9 March.

The links cited in the reply are available below:

[1]https://online.hmrc.gov.uk/shortforms/fo...

[2]https://www.gov.uk/government/uploads/sy...

[3]http://www.parliament.uk/business/commit...

[4]http://www.parliament.uk/business/commit...

[5]http://www.legislation.gov.uk/ukpga/2005...

[6]https://www.gov.uk/government/news/facts...

[7]https://www.gov.uk/government/uploads/sy...

 

Regards,

 

Adam Goodwin | Information Rights Case Adviser | Correspondence and
Information Rights Team | Corporate Centre Group HM Treasury, Third
Floor/Red Zone, 1 Horse Guards Road, London, SW1A 2HQ
| [8]www.gov.uk/hm-treasury 

 

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navartne left an annotation ()

Part of the response to this request says "Government Ministers (or HM Treasury) are not informed of the progress of enquiries and play no part in agreeing the amount of tax to be paid by the taxpayer. This is an important separation between policy, for which Ministers are accountable, and the administration of that policy, which is the responsibility of the Commissioners of Revenue and Customs"

When the news of the 130 Million Pound Google tax deal was announced. George Osborne appeared before the media and said:

"“This is a major success of our tax policy,” he told reporters. “We’ve got Google to pay taxes and I think that is a huge step forward and addresses that perfectly legitimate public anger that large corporations have not been paying tax. I think it’s a really positive step … I think it’s a big step forward and a victory for the government.”

He said "victory for the government". If it is, then it means there is no clear separation between HMRC and Ministers. The other side of the coin is that he was attempting to take credit for something which he (or the government) had no part in.

See full details:
https://waitingfortax.com/2016/01/27/gue...
http://www.telegraph.co.uk/news/politics...
https://www.theguardian.com/technology/2...

Osborne has said ""When I became Chancellor Google paid no tax. Now Google is paying tax and I have introduced a new thing called a diverted profits tax (DPT) to make sure they pay tax in the future."I regard that as a major success. Is there more to do? Clearly there is. We've got to make sure the international rules catch up and we are leading that effort.""

There are reports in the links attached above that it is "unclear how much – if any – of the £130 million was down to Mr Osborne’s new tax."

Of course, each time this has been bought-up in Parliament, the government has claimed "taxpayer confidentiality" and not answered the questions.

Dear Her Majesty’s Treasury,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Her Majesty’s Treasury's handling of my FOI request 'HMRC spending on corporation tax avoidance/evasion enquiries'.

Please consider the following when conducting an internal review:

Response to Question 1: Your response did inform me the public body that may hold the information. However, I feel that you should have consulted HMRC to ascertain if they held the information, if they did, you ought to have transferred this part of the request to HMRC. (As per the Code of Practice under Section 45 of the FOI Act 2000)

Response to Question 2: The link 2. https://www.gov.uk/government/uploads/sy... to document titled ' Annual Report and Accounts 2014-15 Governance Statement, Director’s Report and statistical tables' was useful and other links to the Parliament website answered Question (2) well.

Response to Question 3: Only partially responded to. The Act of Parliament cited does set out HMRC's statutory duty of confidentiality. However, Section 20 of the Commissioners for Revenue and Customs Act 2005 sets out the statutory duty of disclosure in the public interest. I feel this ought to have been mentioned in your reply. Kindly consider this aspect when conducting the internal review.

Taxpayer confidentiality was also a feature in the Treasury committee scrutiny of HMRC's annual report and Accounts 2014-15. (See: http://data.parliament.uk/writtenevidenc...)

when Edward Troup said:

"As you probably know, we are consulting in a number of areas on the possibility of naming taxpayers as part of the overall deterrence for non-compliance. Ultimately, the choice is for Parliament. It is not for us to decide, although we can in certain circumstances within our existing powers, as we do under the publication of persistent defaulters legislation—where we do publish names from time to time. Ultimately, however, it is a matter for Parliament and the points you make are something Parliament will want to take into account before giving us powers to name.

We do think there are circumstances when naming can be a powerful deterrent. Just as people have used the factor of time to take advantage through litigation, in some circumstances they use the benefit of anonymity to feel they can push further than they would do if they felt their actions were going to be exposed. As ever, these things are always a balance."

to which Lin homer (Chief Executive and Permanent Secretary) of HMRC replied:

"To be clear, we will not breach taxpayer confidentiality, but, obviously, when a matter is being argued in front of a tribunal, the participants in the scheme will often be publicly named in those proceedings. That has been one of the sources of information. Again, for someone considering these schemes, there are a number of indicators that would help a taxpayer think about the risk they are entering into."

Response to Question 4: The link to the document 'Managing Public Money' is useful, along-with the link to the Parliament Public Accounts Committee webpage provided in response to question 2.

I found the following from 'Managing Public Money' particularly useful:

“1.3.2 From time to time Parliament may examine government activity. Select committees
examine policies, expenditure, administration and service delivery in defined areas. The
Committee of Public Accounts (PAC - see section 3.5) examines financial accounts, scrutinises
value for money and generally holds the government and its public servants to account for the
quality of their past administration.”

However, I feel it may have been useful to provide a link to the report by the Comptroller and Auditor General titled 'Settling large tax disputes' published by the National Audit Office. (Available from: https://www.nao.org.uk/report/settling-l...), since it's clearly evidence of how an independent review and the publication of the results is a useful check on the workings of HMRC.

Response to Question 5: This part was adequately addressed thorough the 'managing public money' document. The document clearly explains the role of the The Comptroller and Auditor General as an independent auditor and the role of the Committee of Public Accounts as providing scrutiny over 'value for money'. (Section 1.3.2 of document)

Response to Question 6: Who is responsible for starting a tax avoidance/evasion enquiry against a particular corporation.? This part was adequately addressed. Separation between policy and the administration of the policy clearly explained, with a link to the relevant government website/page provided. (https://www.gov.uk/government/news/facts...)

Response to Question 7:

i) This part was adequately explained. As I understand, The Treasury would not be aware of HMRC tax enquiries as the responsibility belongs to HMRC commissioners; the administrators of policies set out by the Treasury.

ii) As I understand, from the 'Managing public Money' report/document, the Comptroller and Auditor General is responsible for auditing both expenditure and revenue of HMRC (Section A.1.1.5 of 'Managing Public Money'); and the scrutiny of whether public funds are used efficiently, economically and effectively is done through conducting value for money (vfm) studies/examinations. Section 1.3.2 and 3.5 of the same publication states that the VFM studies come under scrutiny at Public accounts Committee hearings.

The 'HMRC Annual report and accounts' are scrutinised by the Treasury committee (http://data.parliament.uk/writtenevidenc...)

HMRC in turn recognises that the Treasury Select Committee, Public Accounts Committee, and the National Audit Office scrutinise their performance (See: Section 2, page 60 of HMRC Annual Report and Accounts 2014-15 - Governance Statement, Director’s Report and statistical tables, available: https://www.gov.uk/government/uploads/sy...)

“We know how important recommendations made by external scrutiny bodies are to our work and we closely monitor how they are implemented. We monitor recommendations made by the Public Accounts Committee (PAC), the Treasury Select Committee (TSC) and the National Audit Office (NAO), reporting to our Audit and Risk Committee (A&RC).”

However, my original question to this part was: How does the Treasury allocate funding (in terms of value for money for the taxpayer) to HMRC without being aware of at least an estimated figure of the costs associated with conducting these enquiries.

The HMRC Annual report 2013-14 (available at: https://www.gov.uk/government/uploads/sy...) states:

“The Spending Review revenue targets are on track to be achieved.
They continue to be monitored by ExCom through its monthly
performance hub meetings. Departmental performance measures
are agreed with HM Treasury.”

It's not clear from your reply whether the Treasury is aware of costs associated with the inquiries conducted by HMRC. The 'Managing Public Money' report does not contain this level of detail.

iii) Original question: In line with 7(ii) how does the Treasury allocate efficient and cost effective spending figures/targets (through a balanced budget or otherwise) without having any estimated figure (of conducting these enquiries) available.

Please investigate if this part was handled properly in your reply. As indicated in (ii) above, if the Treasury is to agree on performance measures proposed by HMRC, do you not need to have some idea of how funds are spent by HMRC.

iv) I'm afraid the response to question 7(iv) is deficient because the reply did not contain any specific details if the Treasury provides HMRC with unlimited funds. The question was based the report HMRC Annual Report and Accounts 2014-15 Treasury Committee meeting (HC 588 Tuesday 10 November 2015) where George Kerevan asked the question:

"...the Department is not ring-fenced, is it, in terms of the Spending Review? "

and Lin Homer (Executive Director of HMRC) replied: "No".

George Kerevan responded: "You are not entirely sure what your budget is going to be in future."

to which Lin Homer replied: “We are in the Spending Review with everyone else; we will know fairly soon. We are doing lots of work on that with Treasury colleagues at the moment. We are in a unique position, in that, in my time in the Department, it almost feels as though we have a mini-Spending Review every six months. I believe every fiscal event is an opportunity for HMRC. We generally get some more work, but, if we have good ideas, on those occasions we often get more investment as well. We are looking to have a sustainable plan for delivering really good tax, in as good a way as we can at the least cost we can for the country, because after all there are other things to spend taxpayers’ money on.

In putting forward our business plan, which is the basis of our negotiation for the Spending Review, we are looking for things we believe are sustainable. Broadly, over the last SR, that is what we did. By the end of the SR, we were making run-rate savings of £900 million a year; we were getting more tax in. Customer service over that period had gone up—not as much as we would like, but it had gone up. Compliance yield had gone up, and that was also at record levels.

I do believe it is possible to reduce the cost of public services whilst maintaining or improving the levels of service. I do not mind being engaged in that negotiation. We have seen Government Ministers prepared to say, “If you can come up with a good idea, we will invest in it.” We have also been the beneficiaries of an investment programme, and I hope that will continue into the future as well.”

In terms of what was requested, it would have been useful if you had provided a definitive answer as to whether:

a) the department is still not ring-fenced.
b) the outcome of the latest Spending Review, at a minimum. (e.g. https://www.gov.uk/government/publicatio...) Previous spending reviews would also have been useful.

The Treasury Select Committee meetings (mentioned above) suggests that some of the HMRC's budget are decided during the spending review. I've also found that budgets are allocated during other key government events throughout the year. e.g. Annual Budget (e.g: https://www.gov.uk/government/publicatio...), autumn statement (held together with the spending review in 2015) etc.

The National Audit Office - HMRC annual report of 2014-15, Report by the Comptroller
and Auditor General contains the following:

“HMRC’s strategy over the past five years has been to reduce costs, while increasing
its compliance work to secure additional revenues. Its settlement with HM Treasury at the
2010 Spending Review included a £917 million reinvestment of its efficiency savings in
compliance work to generate additional revenues of £7 billion per year by 2014-15.”

The National Audit Office, HM Revenue & Customs 2013-14 Accounts - Report by the Comptroller and Auditor General, page R6, states (Avaialble: https://www.nao.org.uk/wp-content/upload...) :

“..HMRC’s strategy since the 2010 Spending Review has been to do more compliance work to secure additional revenues. Its settlement with HM Treasury (the Treasury) included a £917 million reinvestment in compliance work in order to generate additional revenues of £7 billion a year by 2014-15. HMRC’s success in delivering this strategy depends on its ability to:

• identify the risks to tax compliance and design effective interventions;
• allocate resources to address these interventions; and
• measure the effectiveness of its compliance work.”

The HMRC annual report of 2014-15, page R53, (https://www.gov.uk/government/uploads/sy...) contains the following:

“ Key challenges to making changes

4.14 HMRC is beginning to plan activities to deliver its strategy over the next five years.
It expects to spend over £500 million on the changes during 2015-16 (around 15% of its total spending). It will decide how to fund and schedule key activities after 2015‐16 during the upcoming Spending Review; HMRC and HM Treasury will also agree new performance measures to monitor progress and hold HMRC to account for its performance.”

v) who is responsible for scrutinising HMRC's spending?

From the 'Managing Public Money' document and other documents published by the Audit Office (a 2014-15 report available at: https://www.nao.org.uk/wp-content/upload...) the Comptroller and Auditor General (C&AG) is responsible for scrutinising HMRC Spending. The 'Managing public Money' report contains this information. However, it's not clear if the Treasury is responsible for scrutinising HMRC spending by monitoring HMRC performance measures.

general comments and feedback -

I note that the reply to this request was provided as a scanned letter. The website links were provided within the body of the e-mail for which I am very grateful. Providing the reply as a scanned letter (without text copy capability) did affect my ability to copy and paste relevant sections of your reply to this internal review request, without having to type it in word-for-word. Although a minor inconvenience, worth flagging nevertheless.

There may be other implications by providing the response in image scanned pdf (without text copy capability).
A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/h...

Yours faithfully,

Mr Navartne

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Dear Sir/Madam,

Thank you for your Freedom of Information internal review request. I write to confirm receipt of your request and to let you know that it is receiving attention. If you have any enquiries regarding your request do not hesitate to contact us.

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Dear FOI Requests,

Just a gentle reminder that it's now 30 business days since requesting the internal review.

please conduct the review and respond immediately.

Yours faithfully,

Mr Navartne

FOI Requests, HM Treasury

Dear Sir,

Thank you for your email dated 19th July. Your request is receiving attention and we have made good progress. HM Treasury will reply in due course.

Kind regards

Correspondence and Information Rights Team | Corporate Centre Group | 3rd Floor Red Zone | HM Treasury, 1 Horse Guards Rd, London, SW1A 2HQ
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FOI Requests, HM Treasury

1 Attachment

Dear Mr Navartne

 

Please find attached a response to your internal review request. Below are
the links cited in the response.

 

[1]https://www.gov.uk/government/uploads/sy...

 

[2]https://www.gov.uk/government/uploads/sy...

 

 

Regards

 

 

 

 

Information Rights Unit| HM Treasury, 1 Horse Guards Road, SW1A 2HQ

 

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