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Press watch: HMRC and the multinationals

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HMRC challenged over low tax bills for money-moving giants

‘The head of Revenue and Customs came under pressure yesterday to explain why foreign-owned industry giants are allowed to pay less tax than small family businesses in Britain. Lin Homer, chief executive of HMRC, was questioned over a series of reports revealing that multinationals have slashed their tax bills by transferring profits to companies in more favourable regimes.

‘John Mann, member of the Commons Treasury sub-committee, listed Starbucks, Google, Amazon and Facebook, and queried what the Revenue described as its “very successful strategy” of recovering tax from companies that move money overseas.

‘He asked Ms Homer: “Would you regard it as morally acceptable if a large multinational employing thousands of people with huge sales here was paying less in corporation tax than a business in one of our constituencies that’s owned by a couple as their only form of income?”

‘Ms Homer refused to comment on individual taxpayers, saying only: “It’s important everybody pays their tax. We can do things with big business, small business and individuals to make sure they understand those obligations and to make sure that we both encourage and if necessary forcefully encourage them to do that.”’

The Times, 1 November 2012

Revenue ‘performs well’ on tax avoiders

‘Investigations into multinational businesses have recovered £4.7bn over the past five years, Revenue & Customs told MPs on Wednesday, as it defended its record on tackling avoidance by companies shifting profits to lower tax jurisdictions. Lin Homer, chief executive, said analysis of the tax gap – the difference between what the Revenue collects and what it is owed – showed the UK “performs really well” by international standards.

‘She said the public did not “get” the rules by which international companies were taxed, as she responded to questions from the Commons Treasury committee about the low UK tax take from some multinationals. She said: “One of the challenges for people to understand is that in broad terms companies are required to pay corporate tax in the country where they carry on the economic activity, not necessarily where their customers are located. That is something that it is understandable they don’t get. But obviously my people need to get that and that is perhaps one of the things that gets lost in some of this discussion.”

‘Jim Harra, director-general of business tax, said he could not comment specifically on Facebook, Google Starbucks and Amazon, which have been the subject of media criticism for paying relatively little corporation tax in Britain. The Revenue repeatedly defended the principle of taxpayer confidentiality, which means it cannot talk about specific companies’ tax affairs.’

Financial Times, 1 November 2012