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Another Rangers Mention - Public Accounts Committee

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Taken from FF.





Q50 Austin Mitchell: What is the main problem? Will you ever be able to require these multinationals to pay tax here on the profits they generate here? What is stopping you?


Lin Homer: International law.


Jim Harra: We have discussed in the Committee before that there is an international framework of laws. There is an OECD project in which the UK is a leading participant.



Q51 Chair: Are you working on that?


Jim Harra: Yes, the BEPS project. There are 15 action points in that project, the first seven of which are due to report in September this year to the G20, and the remainder in 2015. In there are policy changes aimed at ensuring that profits are allocated to the place where they are earned, and also that there is greater transparency between multinationals and tax authorities about where they operate and where their profits are.


Chair: Okay. I will come back to some of these issues; I did warn you before you came to the Committee. I am going to Anne and Guto, and then I will come back on some of the issues arising out of what Austin said.



Q52 Mrs McGuire: Could I have some information on one of the high-profile areas of tax avoidance, which is employee benefit trusts? I note that you have had a reasonably good year in terms of pulling back some significant sums. My understanding is that there was a 160% increase in the amount of money that you have managed to pull back. What criteria did you use for settlement opportunities? I understand that the aim of HMRC is to reach a settlement rather than go for an expensive court case. Where are the opportunities for those settlements?


Jim Harra: We have published the settlement opportunities that are available to employers who have engaged in employee benefit trust avoidance. A significant number have stepped forward and settled on that basis. I can certainly send you a link to the detailed explanation of that. It gives a settlement opportunity that is within the law, but which is more attractive to the employer than the worst-case scenario if they go into litigation with us and lose. So a number of them have concluded that the best thing to do is to settle on that basis. It brings in an amount of tax that ultimately could be what they are liable for. It saves us a lot of resource, which we can then deploy on those who are fighting us and enables them to move on.


There are a significant number of variants of employee benefit trust avoidance. One issue for us is that if we were to try and litigate—unlike marketed avoidance schemes, where you usually have a large number of followers of schemes with exactly the same pretty much in each one—these companies are pretty bespoke, so I think the settlement opportunity is the most effective way of resolving the bulk of these cases.



Q53 Mrs McGuire: Can I ask what the current legal status is of employee benefit trusts? Can I turn to a piece of documentation or a link that will give me secure information? Can I be confident that an EBT is in compliance with HMRC rules? Or are they all up for grabs?


Jim Harra: Employee benefit trusts are entirely legal. There can be good non-tax reasons why an employer would wish to set one up, but we did see a significant drive a few years ago. One of the key reasons for setting them up was to avoid pay-as-you-earn and national insurance obligations. We have published information about what is and is not acceptable from a tax point of view, and what we will challenge from a tax point of view, as well as the settlement opportunity that is available to companies if they choose to avail themselves of it.



Q54 Mrs McGuire: You’ve lost a pretty high-profile case in Scotland recently. It is in the public domain, so I am not putting out there what has not been in every Scottish newspaper and probably every football newspaper. One of the criticisms from Sir David Murray—or, if not him, certainly his spokesperson—was that you had various opportunities to settle with Rangers football club, but you decided to push to the upper-tier tribunal, which you lost. I know there are four or five outstanding issues to do with a referral back. If you do not want to speak about that particular case, can you tell me what the criteria would have been for not going for a settlement in cases such as that? I am not entirely convinced of all the financial arguments on this point, but the ramifications that have been suggested are that you may, by your action, have put the club into serious financial jeopardy.


Jim Harra: First of all, if I can correct that misapprehension, which has been—



Q55 Mrs McGuire: That’s fine. This is your opportunity.


Jim Harra: It has been in the media. This dispute on employee benefit trusts was not the reason why Rangers went into liquidation. It was for non-payment of their standard pay-as-you-earn and VAT obligations.



Q56 Mrs McGuire: That’s why I caveated my question.


Jim Harra: In terms of when we decide to litigate, we have a published litigation and settlements strategy that states we will settle only for what we believe we are due under the law. If we believe that we have a greater than evens chance of getting more by litigating than what we can get by settling, generally speaking that is what we will do: we will litigate. We are proud of the success record that we have in litigation. In avoidance cases, we win about 80% of all the cases that we litigate, but that does mean we are not successful in 20% of them. We are disappointed by the upper-tier tribunal decision in the Rangers case. It is still something that can be the subject of appeal, so I cannot go into too much detail about the litigation itself, but, as I said, we have a very good track record and we may not have reached the end of the line on this one.



Q57 Mrs McGuire: Given, though, that it is in the public domain that Murray International Holdings wanted to have a settlement, was there any opportunity at all, from your point of view, for some consensus to settle on this case? Or, as some would allege—certainly some supporters of Rangers football club—were you out to take a high profile business to court when you could have actually reached a settlement?


Jim Harra: I can’t discuss what discussions we had in that particular case. It certainly is the case that where we receive a settlement offer from large businesses, whether the case workers are minded to accept or reject them, they come to the tax assurance commissioner and two other commissioners to make the decision. That has been the case since 2012, and that would include major EBT cases. It is certainly the case that we reject settlement offers where we believe that the better value for the Exchequer is to proceed with litigation, but we do that in accordance with published criteria.



Q58 Mrs McGuire: So you are rejecting the allegation that this was a high-profile case that you could have settled in a different way?


Jim Harra: Yes. We certainly don’t decide to take people on because they are high-profile; we use objective criteria for deciding whether to litigate.


Sir Amyas Morse: Just for clarity—forgive me, because this is due to my faulty memory, I am sure—you did have exemplary criteria in individual tax avoidance, didn’t you? So if you had an individual who was in a prominent position, that would affect your approach to investigating tax avoidance, or your policy in terms of settlement, or what you would look for in terms of penalties and disclosure. Or is that not a factor at all? Exemplary issues are not a factor for you—is that what you are saying?


Jim Harra: I think when it comes to litigating a technical tax issue, that is not a factor for us. There are certainly some people from whom we expect higher standards of behaviour than others, and therefore we can take a tougher line. For example, if an accountant in the tax profession does something, we may decide to penalise them more or to take a criminal approach, whereas if it was a plumber, say, we might have taken a slightly different approach.


Lin Homer: Just to be very clear to both of you, no, we do not take cases with a view to the headlines, if that is the suggestion. Indeed, I think quite a lot of our debates with you about taxpayer confidentiality are partly because we believe it is very important that we apply our principles consistently and fairly. That is why it is so important that the published guidelines are applied. Also, it is why we think the tax assurance commissioner role has been a big part of trying to ensure that consistency over the last period, and of course Edward has just published his second report.



Q59 Mrs McGuire: Could I ask one final, more general question on EBTs? Reading the professional press, there appears to be a view that some companies involved in promoting EBTs are beginning to feel that it is about time to bite back at HMRC, and collectively they are looking at whether or not they challenge your interpretation of EBTs, as opposed to waiting for you guys to come for them. Obviously, you will be aware of that, given that you will scan the professional press, a bit like ourselves, but do you think that that is a realistic option for some of those companies and firms?


Jim Harra: They are perfectly entitled to challenge us; we are no more in the driving seat on litigation than the taxpayer is. At any point a taxpayer can say, “I’ve had enough of talking to you about this, HMRC. I believe you are wrong, and if you don’t concede, I’m taking this to tribunal,” and they are perfectly within their rights to do that. I have to say that to date the trend on EBTs has been to come to us and to settle.

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Jeez, we can't tell you how much it cost. We can't tell you whether we could have settled. We can't tell you what's happening in certain cases. Basically you can get stuffed and there's nothing you can do. Huzzah for HMRC!


Anyone who wants to understand exactly how Westminster works and how we are goverened simply has to devote themselves to the study of two sources: Yes Minister and The Thick of It.

Those two fictional programmes, and especially the first, are based more in fact than any documentary ever made.

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Who is Jim Harra?

He is talking nonsense when he says the EBT's werent the reason oldco went into liquidation. By including the alleged EBT debt it allowed HMRC to become the main oldco creditor which allowed them to reject the CVA. HMRC subsequently lost both appeals on this and are now pursuing this thro the CoS.The main oldco creditor would then have been ticketus who would have approved the CVA.

Im not kidding when I say this whole damn thing was a set up. LBG too

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Anyone who wants to understand exactly how Westminster works and how we are goverened simply has to devote themselves to the study of two sources: Yes Minister and The Thick of It.

Those two fictional programmes, and especially the first, are based more in fact than any documentary ever made.


Always loved the first of those shows, but while I'm a fan of Iannucci's work, I found The Thick of It less interesting. Hard job matching up to Hawthorn, Eddington & Fowldes, mind you.

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Always loved the first of those shows, but while I'm a fan of Iannucci's work, I found The Thick of It less interesting. Hard job matching up to Hawthorn, Eddington & Fowldes, mind you.


I think they approach the same subject from two contrasting positions and in two very different ways. TTOI focuses on the hypocrisy and venality of much (most?) of the political class, whereas YM brilliantly exposes the machinations of the people who actually do run the country - Whitehall civil servants. What's depressing about YM is that in the 30 years since it was made absolutely nothing has changed.

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No argument on that score: I see in my newspaper this morning that not even being a paedophile with links to murderers is enough for them to break their codes. At least the latest horror revelations might put an end to the BJK stuff, although to judge from the glee on Twitter this morning we're more likely to hear competing BJK v BMaggieK songs.


But it seems that, in Rangers case at least and at last, some people are asking some questions.

Edited by andy steel
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I certainly hope you're correct Andy that people are now starting to ask questions.Not before time.


I had to laugh at an article in the Daily Mail online this morning about the the tax avoidance schemes used by the likes of Gary Lineker, David Beckhametc which have now been sent 90day notices to settle. HMRC commented that these individuals tax affairs were 'private & confidential'

Just a pity Rangers EBT's werent 'private & confidential' to prevent a slimeball like Mark Daly accessing them with apparent ease and making a fictitious documentary for which he won a now discrdited BAFTA.

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I put this out yesterday CB via twitter and directed it to Anne McGuire MP - the same individual asking the pertinent questions


It is only part of a package of information I received from a "mutual friend" of all of us.


Certain parts of the information require further investigation and research before I commit my findings to blog.


I can categorically say that the latest information will further add to the catalogue of inconcistency and mis-direction which HMRC stand accused of.

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