BKL tax partner David Whiscombe has today commented via the UK200Group on a report that HMRC has won a significant victory in its battle against corporate tax avoidance after a major management consultancy admitted defeat in a long-running bonus dispute.
PA Consulting has withdrawn its appeal to the Supreme Court after the Government said that private companies that engage in deliberate tax avoidance could be blacklisted from bidding for public sector contracts.
PA’s decision not to continue the case means HMRC can now recoup millions in tax from other companies that paid employees bonuses through offshore companies.
“This case is of largely historical interest: the particular scheme found to have failed in PA’s case has long since been countered by legislation, so even if PA had won, the result would have been of little general significance.
“The trouble with blacklisting companies which engage in “deliberate tax avoidance” is that what is “deliberate tax avoidance” is a completely subjective concept which requires the substitution of some woolly undefined notion of the “right amount of tax” for the amount of tax which is actually payable under the law. And the farcical pillorying of NPower by MPs who seem utterly ignorant of how tax works shows how dangerous it is to allow subjectivity and prejudice to replace the law in this area.
“By all means cut out proven tax evaders from government contracts: but those who take care to pay no more and no less than the law demands? Definitely not.”
