No doubt we all remember the furore arising from the Public Accounts Committee’s (PAC’s) recent interrogation of HMRC. One aspect that stuck in my mind was the outrage when Dave Harnett refused to discuss the tax affairs of individual companies in public with the PAC, on the basis of HMRC's duty of confidentiality to taxpayers. The public was outraged at the idea that certain large businesses had been given some kind of deal and the PAC was outraged that HMRC refused to tell them what they felt entitled to know. Much of the tax community was outraged that the PAC considered itself entitled to ask for the confidential affairs of a taxpayer to be discussed publicly.
I wonder, however, whether there is a debate to be had as to whether publicly listed companies should continue to enjoy full confidentiality in respect of their tax affairs?
This is a radical suggestion for the UK and I am certainly not suggesting that, for example, HMRC enquiries into companies’ tax returns be carried out in public. But companies list on stock exchanges in order to be able to raise money from the public. As a result, they are required to make a lot of information publicly available, to allow investors to carry out appropriate due diligence and to satisfy themselves as to the security and level of risk of their investment. If the tax affairs of a company have a material impact on those companies, as in the current Glasgow Rangers case, for example, is there an argument that this information should also be publicly available to investors?
If the idea of public companies’ affairs being open is a step too far, perhaps the answer is to improve oversight. The PAC’s doubts arose in respect of the settlement of specific HMRC enquiries, but they raised wider concerns about public confidence in HMRC, its ability to fulfil its role and the degree of even-handedness of treatment between taxpayers. Parliament cannot review all the work of HMRC, but if it were given the right to review HMRC’s dealings with public companies, would this give both Parliament and the public greater confidence in HMRC and its senior officers? The recent announcement that there will be an ‘assurance commissioner’ is a start, as the role will be ‘to oversee any tax settlements for more than £100m reached with large companies’ and the commissioner will be responsible for ‘protecting the interests of taxpayers at large’. However, this will still be an internal HMRC appointment, so there will be no increase in transparency of HMRC’s dealings.
I appreciate that this suggestion may not be popular, particularly among the public company community, but I feel that this is an important point of principle that we should give some further thought to, rather than dismissing it out of hand. It is, after all, not entirely out of line with other jurisdictions, such as the USA where politicians are routinely expected to make their tax returns public, and other countries where the tax returns of all taxpayers are available to view as a matter of public record.
Pete Miller, Partner, The Miller Partnership
