HMRC is not "assertive enough" with tax-dodging multinationals, says Lords committee

The House of Lords’ economic affairs select committee has called for more funding for HMRC to crackdown on tax-dodging schemes of Britain’s biggest companies.

The committee, which is chaired by former education secretary Lord MacGregor and includes ex-Chancellor Lord Lawson, said Britain has a “serious problem” with corporate tax avoidance.

Last month, Starbucks stumped up £5m of UK tax for the first time in five years after fierce criticism from David Cameron. Back in May, Google executive Matt Brittin faced tough questioning from MPs on the Public Accounts Committee over the company’s tax affairs.

The committee said that Starbucks’ move to volunteer extra payments is “not a sound basis for a system of taxation”. They report also said that companies should publish a summary of their tax returns so that the information is in the public domain.

Lord MacGregor of Pulham Market, chairman, Economic affairs select committee said: “There is a sense that corporation tax is voluntary for some multinationals which operate globally while small UK-based businesses go by the book and have to pay. That brings the tax system into disrepute and loses much needed revenue.”

The committee went on to say that HMRC may not be “assertive enough” in its tax negotiations with multinationals. They also proposed plans to take private testimony from HMRC to name and shame companies avoiding tax.

However, HMRC said that revealing tax affairs would require a change to primary legislations governing HMRC.

In a statement, HMRC said: “HMRC officials cannot discuss the details of the tax affairs of identifiable taxpayers – individuals or corporates – except in limited circumstances set out in legislation. Our legal advice is that if Parliament requires HMRC to discuss the tax settlements of named companies a change would be required to the primary legislation governing HMRC.”

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