HMRC Chief: We Collect Tax Under Duty of Law Not Morals

HMRC's chief defended its success in winning a high court challenge, against its "sweetheart deal" worth £10m, between the group and investment banking giant Goldman Sachs.

Speaking in front of the Public Accounts Committee (Pac), HMRC's chief executive and permanent secretary Lin Homer said that winning the anti-tax avoidance campaign group UK Uncut's high court challenge was "good."

"I do know and acknowledge the depth of emotion [that the public] feel about this but we collect on taxes that are set in law by politicians like yourselves," said Homer when Pac chairperson Margeret Hodge MP said that the Judge's decision today only found that the deal was legal, but not morally correct.

"We are duty bound to collect and investigate under regulations, set out by lawmakers, not on what 'you'd like' us to collect on."

HMRC's Homer and Jim Harra, director general, business tax faced the panel of MPs today, fresh out of court, where a judge ruled in favour HMRC against UK Uncut.

Lawyers working for UK Uncut took HMRC to court over its decision to let Goldman Sachs off millions in interest on tax it owed after a court ruled an offshore avoidance scheme used by the bank to dodge employer national insurance contributions was illegal.

However, the judge noted that while it "was not a glorious episode in the history of the Revenue", the 'sweetheart deal' was legal.

"I rebut [Hodge's comment] that we operate in the way that favours big companies. We use expert tax professionals that investigate and determine tax claims and payments. In the first four months of this year, we have protected £1bn ($1.6bn, €1.2bn) in tax for the UK through litigation," said Homer.

"We make very good decisions and we win 86% of the time, when we go to court, so you'll realise that the judge's decision today shows that we are right."

Meanwhile, according to figures from a Freedom of Information Act request cited by law firm Pinsent Masons, HMRC saw that a large number of companies had used artificial intercompany transactions to "inappropriately reduce taxable profits" at an increase of 48% year on year.

As of 31 July 2012, the amount of 'tax under consideration' from large businesses, in relation to these tax avoidance methods including transfer pricing and reporting thin capitalisation, stood at £1bn, compared with £680m a year earlier.

Today, Google vice-president Matt Brittin faced the Pac panel and hit back at politicians who claim the company has been aggressively avoiding paying the right amount of corporation tax.

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