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Listen to the evidence, tax experts tell Margaret Hodge

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A leading professional body has called on the chairman of the Commons public accounts committee (PAC) to focus on fact finding and allow witnesses to explain their answers, after Taxation editor Mike Truman warned that the committee was ‘in danger of being made a laughing stock’.

As Tax Journal reported last week, Margaret Hodge’s suggestion that it was ‘inappropriate’ for the big four accountancy firms to help Treasury personnel to shape new legislation drew an angry reaction from tax professionals.

In a comment piece in this week’s issue of Taxation, Truman claimed that Hodge was engaged in a ‘personal crusade … against the tax profession as a whole … because it will not fall into line with her idiosyncratic and ill-informed views about tax avoidance’.

‘No sooner would one of [the heads of tax giving evidence to the PAC last week] start to answer a question than Hodge would jump in with a dig or a slur,’ he said.

Truman had ‘no hesitation in awarding Margaret Hodge the title of Tax Prat of the Year’. That ‘award’ drew a very positive response on Twitter, on Wednesday and Thursday, from a number of practising tax experts and tax writers.

However, some experts have told Tax Journal that it was not a helpful contribution to a debate that remains largely polarised. A spokesperson for Hodge declined to comment on Truman’s article today.

Jane McCormick, head of tax at KPMG, told Hodge during last week’s PAC hearing that all of the big four firms were frequently asked to provide technical support ‘in various areas, particularly when new legislation is being looked at’. The people who do that do not set legislation, she said.

But Hodge claimed that the ‘so-called technical support’ was ‘you guys writing the legislation’.

Tax Journal editor Paul Stainforth said, in an editorial note in today’s issue, that ‘it seemed that the PAC was more interested in grandstanding than fact finding’.

Truman said he was ‘incensed’ that Hodge had ‘attacked the work done on technical committees and working groups by tax professionals from private practice, and in particular the work done by staff who are seconded from their firms’.

It is ‘routine’, he said, for the Treasury to ask firms to second staff for a period to provide technical and practical expertise when significant tax reforms are being prepared.

He added: ‘It is fundamentally wrong for Margaret Hodge to say the seconded staff were “drafting the legislation”, because there is a separate Office of Parliamentary Counsel with that responsibility.’

‘Allow witnesses time to explain’

The Chartered Institute of Taxation declined to comment on the ‘award’. However, the tax body’s chief executive Peter Fanning told Tax Journal: ‘Parliamentary committees perform a tremendously important role in the scrutiny of government policy and administration. Calling and questioning witnesses is essential to the process of evidence-based policy-making and committee members are entitled to be robust and persistent in their questioning and probing.

‘That said, we feel committees are at their best when their focus is on fact finding and when there is a willingness to listen and allow witnesses time to explain. It is disappointing if they go in with a preconceived idea and are unwilling to allow the evidence to affect it.’

Fanning added: ‘In my experience, effective committees seek out evidence and answers rather than arguments.’


Tax campaigner Richard Murphy accepted that Hodge was ‘robust’, but said she was ‘seeking to speak truth to power’. She had done a ‘valuable service to this nation in doing so’, he said.

Responding on Twitter to Truman’s article, Richard Lupson-Darnell, a practising chartered tax adviser, said: ‘Staggering – if it were my [Taxation] subscription and not that of my employers, it would now be cancelled.’ But Truman said today that favourable responses to his piece were ‘far and away in the majority’.

Last week an editorial in The Guardian noted that Hodge’s ‘innovation’ since taking the PAC chairmanship in 2010 had been to focus on tax avoidance. ‘She has allied her frontbencher's instinct for where public interest lies with a backbench pugnacity,’ it said.

The hearing of the ‘big four’ summed up the Hodge style, it added. ‘Platitudes about customer service were cut short with a bark – and a tetchy demand that the suits get to the point. This was no mere showmanship, but produced that an unlikely thing: a sparky and informative conversation about accountancy.’

Taxation is published by LexisNexis, the publisher of Tax Journal and the CIOT journal Tax Adviser.