The Reverse Robin Hood

Robin Hood, as the song says, takes from the rich to give to the poor. George Osborne seems to be following the opposite strategy by refusing to take the tax rightfully owed by large corporations but clawing back the money they owe the Treasury through his cuts programme instead.

At last, the Public Accounts Committee has begun shining a light on the work of the HMRC and their propensity for agreeing ‘sweetheart’ deals with large corporations. The Vodafone scandal came to light a few years ago – in which the company was let off just under £7bn of an £8bn tax bill. And more recently, a whistleblower from within HMRC (who is now facing disciplinary procedures) has told the Public Accounts Committee that HMRC made an agreement with the global investment bank, Goldman Sachs, to let them off repaying £10bn in tax penalties.

These two deals alone represent pretty much the entire sum that Mr Osborne is proposing will be saved by his draconian system of benefit cuts over the next few years. Cuts that will have a very real and detrimental impact on the lives of thousands of families, plunging children into poverty, and pushing millions of disabled people into a poverty trap that they will struggle to ever recover from.

I have to confess a degree of personal interest here. I used to work with the very tax accountants that cooked up some of these tax-saving schemes and, I believe that Vodafone and Goldman Sachs represent the very tip of the iceberg. Tax accountants are paid millions every year to come up with aggressive tax avoidance schemes that HMRC find hugely difficult to disentangle, even if they are trying very hard to do so (and the Public Accounts Committee is now questioning whether they are doing that at all). And when two of HMRC’s four non-executive directors are former board members of failed banks, one wonders about the level of scrutiny and accountability they really provide.

Now obviously things are never quite this simple in reality and getting big corporations to pay back the tax they owe is not going to fill the bottomless pit that is the UK’s debt. But it would go a long way to sorting out the problem and would mean that those who rely on every pound to make the difference between being able to turn the heating on or not.

This is not an issue that has only arisen since the Tory/LibDem alliance came to power  – New Labour were none too keen on coming down hard on tax avoidance by big business in a misguided attempt to build bridges with the country’s financial powerhouses.

It has long been argued that companies are quite right to employ every strategy they can to avoid paying excessive tax and, to an extent, that does make sense – why would anyone pay more tax than they absolutely should? The problem now is that the deals are so complex and the relationships between HMRC, government, and business so very blurred, that it is looking more and more like that it is in many people’s interest not to pursue the corporations at the top for their contribution to Britain’s deficit but to hit the people at the very bottom instead. 

An Anonymous Frother