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Ritchie today

Hmm.

Whenever there’s talk of tax increases we always get the same response: the rich will leave. Let’s ;eave aside whether that would be a good or bad thing for the moment, and let’s just say that whatever they threaten they don’t leave.

From the ONS:

The number of people leaving the UK for 12 months or more fell to 368,000 in 2009 compared with 427,000 in 2008. The drop in total emigration was due to a decrease in the numbers of British and EU citizens leaving the UK. An estimated 140,000 British citizens emigrated in 2009, the lowest number since 1999 and down from 173,000 in 2008.

That\’s an awful lot of people not leaving really.

Introducing a policy that gives away £840 million a year to large companies and calling it a measure to cut tax avoidance seems to me the most Orwellian form of double speak I can think of.

Tax avoidance is, in Ritchie\’s definition, obeying the letter of the law but not the spirit. So, now that we have the law explicitly stating that overseas profits will not be taxed, dodging around the letter or spirit of the law in order to avoid such taxes is no longer necessary. For both the letter and the spirit of the law now say that offshore profits are not taxable.

So, yes, this does reduce tax avoidance by Ritchie\’s very definition.

What\’s truly joyous about this is that of course such a change is something Murph\’s been campaigning for. His beloved country by country reporting for example. Profits made in Nigeria should be taxed in Nigeria, nowhere else. Abolition of taxation in the UK of the profits made in Nigeria by a UK company is therefore entirely consistent with his already expressed views.

This is just barnstormingly good.

It seems to me that as a principle of good governance for the tax system of the UK a very clear code of conduct for those who hold ministerial appointment as well as those who might be considered for ministerial office within the Treasury is essential if damage to the reputation of the tax system through repetition of such an incident is to be avoided. I would suggest that the necessary code of conduct might be as follows:

1. No Treasury minister shall at any time be seen to engage with or be seen to endorse the activities of any company that has a taxation dispute outstanding with H M Revenue & Customs that might with reasonable probability in the opinion of H M Revenue & Customs result in litigation, with that authority having the responsibility of advising the Treasury of the identity of such companies without in any way disclosing the details of the matters under dispute
2. No person shall be appointed to a ministerial post if they shall within the period of two years before appointment to that office have received funding from any company that has a taxation dispute outstanding with H M Revenue & Customs that might with reasonable probability in the opinion of H M Revenue & Customs result in litigation, with that authority having the responsibility of advising the Treasury of the identity of such companies without in any way disclosing the details of the matters under dispute. Funding for these purposes shall include the payment of a salary or payment for advice as well as the funding of the potential appointees political campaigning, either directly or indirectly through the offices of the Party that they represent, and whether paid directly to them or provided indirectly through the provision of services for his or her office.
3. Ministers shall not be seen to engage in the taxation affairs of a company in a jurisdiction other than the United Kingdom for fear that it shall be presumed that they might take the same interest in its affairs within the United Kingdom
4. No person who is engaged by any company that has a taxation dispute outstanding with H M Revenue & Customs that might with reasonable probability in the opinion of H M Revenue & Customs result in litigation, with that authority having the responsibility of advising the Treasury of the identity of such companies without in any way disclosing the details of the matters under dispute, be appointed to advise any treasury minister on any matter relating to any aspect of taxation.

I think that if such a code had been followed some of the unfortunate consequences of this matter, innocent as each individual party might have thought their actions to be, could have been avoided and that would have been to the considerable advantage of the reputation of the UK’s taxation system for even-handed impartiality. As such I hope the committee might give consideration to this suggestion that would enhance, in my opinion, the effectiveness of H M Revenue & Customs.

As he pointed out eariler:

The Revenue is involved in 2,721 disputes with the country’s biggest businesses, according to the figures disclosed under the freedom of information legislation. They cover all taxes ranging from corporation tax to specific taxes such as the petroleum revenue tax and insurance premium tax. The oldest dispute goes back to 1990, although most are recent, according to the Revenue.

He\’s just banned any employee or consultant to  from at minimum 3,000 of the country\’s largest companies from engaging in the political process. Or even political donations from such companies or people associated with them.

For who can know two years before the event whether there will be an election, who will be appointed to the Treasury team etc?

 

4 thoughts on “Ritchie today”

  1. So, Ritchie says that the Government mustn’t talk to business.

    I don’t suppose he has any problem with ministers engaging with certain other bodies with vested interests then, such as trade unions (or to pick an entirely random example of such, the PCS)?

  2. Guy, good point.

    If his point is that Ministers should stay out of disputes where there is a conflict of interest (fair enough and I would have thought a problem already satisfactorily solved without requiring complete diqualification from holding any ministerial office at all) then there is no reason he shouldn’t extend the logic to any kind of dispute with any arm of government – not just HMRC.

    So if he takes his logic far enough, he should be disqualifying ministers who have taken £££ from unions (at least public sector ones).

    So that’s the end of Labour then.

    I have so many problems with Ritchie’s stupid suggestion I dont know where to start.

    If Treasury Minister X wants to keep rival Backbencher Y out of office, he can (assuming he has the influence RM suggests) get HMRC to drum up a dispute with Y’s family company. That’ll fix him. Or if HMRC itself wants to keep Y out of action (out of some kind of fear of him, feud etc), it can do this of its own accord.

    And if HMRC really is under the thumb of a dodgy minister, why doesnt he just use his influence to stop HMRC declaring the dispute ‘reasonable probability of litigation’ status?

    And if the dispute is such that it is headed for the courts, why do we care about the partiality of the minister? There’s a judge who will sort it out – all we care about is the judge’s impartiality, surely.

  3. “that might with reasonable probability in the opinion of H M Revenue & Customs result in litigation”

    With this sort of criteria, the problem doesn’t even have to go to court!

    All a company has do to is question an assessment or treatment and that, as they say, is that.

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