David Prosser: The taxman is never going to be popular but he must at least appear even-handed

 

Outlook In carving out a career in taxation, Dave Hartnett, the permanent secretary for tax at HM Revenue & Customs, can't have expected to make himself a popular man. Still, while everyone complains about what the taxman takes each month, Mr Hartnett is increasingly also getting it in the neck for what he doesn't take. Yesterday's hearing at the Public Accounts Committee, in which HMRC found itself accused of letting Goldman Sachs of all people off a £10m tax bill, is just the latest controversy involving Mr Hartnett. Most famously, he is the man accused of letting Vodafone escape a tax bill totalling billions of pounds, a row that was the initial trigger for the UK Uncut campaign against big business.

It should be said, of course, that HMRC vehemently rejects any suggestion it has caved in to large companies that have challenged its tax bills. The companies involved also deny any wrongdoing. For outsiders, moreover, it is difficult to get to the bottom of these arguments, because companies, like individuals, are entitled to have their intimate tax affairs kept private.

What is clear, however, is that Britain's tax codes are in urgent need of rationalisation. The endless rewrites of disparate parts of tax law have left the system riddled with loopholes that wealthy individuals and corporates have only been too happy to exploit, often running rings around HMRC'sattempts to stop them doing so.

In the end, a system of taxation falls apart if those it applies to do not believe it to be even-handed. Though Mr Hartnett would no doubt argue that it is misinformed, there is a growing perception in Britain that on matters of tax, there is one rule for the rich andanother for everyone else.

Whatever the rights and wrongs of cases such as Goldman Sachs and Vodafone, HMRC must share the blame for the way that perception has come about. The tax deal Mr Hartnett signed with Switzerland last month, for example, did nothing to dispel the notion that his agency is not inclined to show the same zeal in chasing wealthy tax avoiders as it does in charging 1.5 million people £100 for failing to file their tax return on time.

Although the deal will see Swiss banks deduct some tax charges from British account holders who haven't declared themselves to the UK authorities – it does allow citizens of this country to go on hiding their assets abroad with little fear of ever being identified.

Unfortunately, Mr Hartnett has form when it comes to failing to think the dangers of reputational damage to HMRC. Only a year ago, he had to make a rapid U-turn after refusing, on national radio, to apologise for a cock-up that saw millions of taxpayers charged the wrong amount, often with disastrous consequences. This is a taxman who rarely seems to help his own cause.

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