Margaret Hodge calls for company tax secrets to be exposed

Maragret Hodge says firms could be forced to disclose their tax affairs to MPs (Jason Alden)

Britain’s biggest companies should lose their ability to hide their tax affairs behind confidentiality rules, the chair of the powerful Public Accounts Committee has told The Independent.

Margaret Hodge suggested firms could be forced to make full disclosures of their tax affairs to a committee of MPs with the power to hear evidence in private. This would allow close, but crucially confidential, scrutiny of their tax arrangements.

The new committee could be set up along the lines of the Intelligence and Security Committee (ISC), Mrs Hodge proposed. The ISC’s members are appointed by the Prime Minister after consulting with the Leader of the Opposition and hearing nominations from MPs.

Its members are subject to the Official Secrets Act, and Hodge pointed out that there has never been a leak of sensitive information: “We could have a committee of MPs overseeing them in private, the same way that the Intelligence and Security Committee operates. That has operated very effectively. There has never been a leak,” she said.

Her suggestion comes amid mounting public anger at the tax affairs of big companies and their use of aggressive tax avoidance schemes, often aided by the big four accountancy firms.

The PAC has held a number of hearings and has sharply criticised bosses of multinationals for paying little or no corporation tax in Britain, including Starbucks, Amazon and Google.

Today Google boss Eric Schmidt will take to the airwaves to say he is “perplexed” by the debate over the company’s tax affairs.

In a pre-recorded appearance on Radio 4’s Start the Week, the internet giant’s executive chairman insisted the company paid everything it was legally required to in the UK and suggested it was up to the Government to change the law if it wanted more from the firm.

Google has come under fire over reports that it paid only £10m in corporation tax in the UK between 2006 and 2011, despite revenues of £11.9bn.

Mr Schmidt said: “What we are doing is legal. I’m rather perplexed by this debate, which has been going in the UK for quite some time because I view taxes as not optional.

“I view that you should pay the taxes that are legally required. It’s not a debate. You pay the taxes.

“If the British system changes the tax laws then we will comply. If the taxes go up we will pay more, if they go down we will pay less. That is a political decision for the democracy that is the United Kingdom.”

Deputy Prime Minister Nick Clegg also raised the controversy directly with Mr Schmidt at a meeting in Downing Street, and days later Labour’s Ed Miliband told the corporation at its own “Big Tent” event it should not be going to “extraordinary lengths” to avoid paying taxes.

Mr Schmidt dismissed suggestions that a legalistic approach to paying taxes did not sit well with Google’s pledges on social responsibility.

He added: “Our position is very simple, taxes are not optional, we pay the mandatory amount.”i