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PAC hearing on gift aid becomes heated

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The Public Accounts Committee hearing into gift aid took place on 2 December, with oral evidence being heard from Lin Homer, HMRC chief executive and permanent secretary, and David Richardson, HMRC director of counter avoidance.

In the sometimes heated discussion about the changes to the tax law in 2000 regarding charitable giving, PAC chair Margaret Hodge told Lin Homer:

‘What is really irritating about this conversation is that when this was introduced in 2000, the Treasury at that point promised a proper evaluation. Had you done that at that time, we would not be having this argument this afternoon. This new system gives taxpayers’ money back into the hands of high-worth individuals and companies. That is what it does. You are trying to say there is a bit of evidence, but if you had done a proper evaluation, you would not end up with the conclusion that the NAO came to in its report – which you signed off, Lin – that there is insufficient evidence to conclude that reliefs on donations in their current form and in the way they are implemented provide value for money’. Lin Homer responded that ‘the 2000 legislation did not fundamentally change the nature of the tax system around charitable giving.’

The hearing also touched on the Greene King case, with Margaret Hodge asking: ‘In this particular case, Ernst and Young devised the scheme. It asked Greene King for 10% of its tax saving, settled at 8%, and signed off the accounts as auditors to Greene King. Are you going to take action against the advisers and accountants in this instance?’ Lin Homer replied: ‘Where we believe that there is something we can do, civil or criminal, where we think there is a pattern or an approach that we should take, we will do it ... You can’t do a criminal prosecution for tax avoidance.’