Perhaps the most radioactive moment in Monday’s often acerbic and – thanks to The Independent’s campaign against tax scams – rich confrontation came when Margaret Hodge asked Edward Troup, Her Majesty’s tax assurance commissioner, if he had once written that “taxation is legalised extortion”.
Well, said Mr Troup, with polite defensiveness, he was gratified that people had read old articles of his in the Financial Times, in which those words had “appeared.” (Ms Hodge, who is sometimes reminded of her own history as the firebrand leader of the leftist Islington Council, interjected: “You can never get away from your past, I can tell you.”)
It was – of course – all a matter of “context”. The article had argued that tax was not a matter for “discretion of the tax authorities” but had to be “left to the rule of law”.
Poachers turned gamekeepers are an old story, and at the time Mr Troup was back working at the top firm which had originally employed him as a tax lawyer. But was he just a little too sympathetic with the poachers he was supposed to be catching? Ms Hodge mused: “I would never dream of using those four words together.” Before going on to ask Mr Troup whether “given those views, are you really the best person to lead the fight, the people’s fight against tax avoidance?”
The exchange went to the heart of the committee’s frustration, as with the fact that the £35bn 2011-12 “tax gap” – between what the HMRC actually raised and what it could raise if everyone paid up – did not even include the global dodges by which Amazon, Google and others pay such negligible corporation tax.
But MPs also focused on the practice, highlighted in this newspaper, by which UK companies manage to borrow money from wholly owned overseas outfits in offshore tax havens, and claim the interest as a tax deduction.
There had been a net loss of £4bn this way up to 2011, admitted Jim Harra, the director-general of business tax. But, protested Ian Swales MP, it was only after 2011 that this had been done on an “industrial scale”. Everyone was at it, including newspapers (apart from The Independent, which was “why they’re the ones doing these articles.”)
Ms Hodge was in her most “just answer yes or no” mood. If there’s one thing the committee likes less than tax avoidance, it’s question avoidance. But it usually gets there in the end.