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HMRC defends award for General Electric tax director

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HMRC has defended last week’s presentation of an ‘external engagement’ award to Will Morris, global tax policy director at General Electric, after the International Business Times claimed that the company had a ‘prolific tax avoidance record in America’.

Morris received the award at 11 Downing Street for ‘championing ever-better customer understanding within HMRC, informing the public debate on large business and tax, and condemning tax evasion and abusive tax arrangements with no commercial purpose’, HMRC said in a press release. ‘The annual awards recognise the contribution that business, professional and voluntary communities make in helping HMRC run the UK’s tax system,’ it added.

Awards were also presented to Paul Aplin, chairman of the ICAEW Tax Faculty Technical Committee; the charity TaxAid, which provides specialist tax advice to people on low incomes; and Peter MacSwiney, chairman of ASM UK Ltd. The winners were chosen by a panel comprising five senior HMRC officials and Rebecca Benneyworth, deputy chairman of the Tax Faculty and editor of Tax Adviser, the CIOT journal published by LexisNexis; John Andrews, former chairman of the CIOT’s Low Incomes Tax Reform Group; and Francesca Lagerberg, head of tax at Grant Thornton. Lagerberg will take on the role of global head of tax services at Grant Thornton next year, economia has reported.

The International Business Times noted that in 2010 the New York Times ‘exposed GE as having paid no taxes that year to US coffers despite global profits of $14.2bn, with $5.1bn of that deriving from its American business’. It suggested that the HMRC award would ‘likely fuel public perception that the tax office is in the pockets of big business’.

Reuters reported in April that a 2011 report by Citizens for Tax Justice ‘claimed GE had an effective negative tax rate from 2008 through 2010, which the company has denied’. The company also challenged a subsequent report alleging that GE had an effective tax rate of 11% in 2011.

The Reuters report quoted GE chief financial officer Keith Sherin as saying: ‘I don't know what to do about it. People have to start looking at the facts. We were as transparent as we could be about 2011. The overall rate was 29%, the US rate was 25%. For people to say we don't pay any taxes when you have those actual numbers, I just don't know what else they want us to do.’

HMRC’s press release did not mention Morris’s role as chairman of the CBI’s tax committee, but in a statement the department said: ‘Mr Morris received an award in recognition of his role as chair of the CBI Tax Technical Committee, also as an active and influential stakeholder, informing the public debate on large business and tax, and contributing to a wide range of consultation exercises. He was instrumental in shaping and driving a CBI report, published in April 2012, on “Tax and British Business: Making the Case”, which condemned tax evasion, abusive tax arrangements with no commercial purpose and “black-box” schemes, and welcomed proposals for a general anti-abuse Rule (GAAR).’

Morris is an Anglican priest at St Martin-in-the-Fields. The Financial Times noted in May 2010 that ‘his unusual background’ had helped ‘bridge the gulf between multinationals and critics who accuse them of avoiding tax in developing countries’.

Vanessa Houlder at the FT reported that Morris had ‘organised high-level meetings between business people, advisers, economists, officials and campaigners’. One campaigner at Christian Aid had described the initiative as ‘incredibly helpful’.

As Tax Journal reported in April, the CBI backed the proposal for a GAAR but said UK companies were ‘perfectly entitled to operate in low-tax jurisdictions for legitimate business purposes’.

Responding in September to HMRC’s consultation on a draft GAAR, CBI director general John Cridland said: ‘The CBI supports a GAAR which is proportionate and focused on highly abusive, artificial avoidance schemes which serve no commercial purpose. We are concerned that the latest proposal is too broad and could affect not just abusive transactions but also straightforward tax management, which is an essential business function. A broad spectrum anti-avoidance rule would compromise the certainty and stability that are vital to give businesses the confidence they need to make and maintain investments in the UK.’

The proposed GAAR is not designed to catch ‘profit shifting’ to tax havens or low-tax jurisdictions. But Cridland told Sky News last week that the UK taxation of foreign companies was an issue ‘whose time has come’.

‘I would be hugely surprised, in five years’ time, if the landscape wasn’t very very different,’ he added.

(Left to right) Caroline Miskin (TaxAid), Will Morris (General Electric), Paul Aplin (ICAEW), Lin Homer (HMRC), David Gauke (Exchequer Secretary to the Treasury), Rosina Pullman (TaxAid), Edward Troup (HMRC), Peter McSwiney (ASM UK Ltd), David Brodie (TaxAid) & Frances Corrie (TaxAid).
Photograph: HMRC