Has anyone actually read Michael Meacher’s United Kingdom Corporate and Individual Tax and Financial Transparency Bill? I say it’s Michael Meacher’s Bill because he is the principal MP sponsoring it through the House of Commons. It was actually written, according to the claims on his blog, by Richard Murphy.
I have to confess that, until now, I haven’t really bothered to look at it. I have read Richard Murphy’s claims that “his” Bill aims to tackle tax avoidance and that it will do so much more effectively than the new GAAR, but I’m not sure I really take his claims that seriously. However, seeing his tweet this morning that the Bill is due to receive its Second Reading in the House of Commons today, I thought I would glance over it.
Actually, it really is worth a quick glance.
My take is that it is not so much about anti-avoidance (certainly not in the sense that many of us will understand it) but much more about getting access to otherwise confidential financial/tax information. My real difficulty with taking this Bill seriously, however, is in the rather rushed manner in which it appears to have been drafted. The detail doesn’t appear to have been thought through at all. Most of the substantive provisions require the Secretary of State to produce regulations giving effect to the provisions. The Bill is really little more than an overview of what Murphy would like to see.
There are also specific examples of poor drafting, though. Take Clause 2, entitled “Disclosure of taxation information by selected large companies”, as an example. Sub-clause 1 defines the companies to which the Clause applies. The first category appears clear enough, those companies in the FTSE 100 within any year ending 31 March plus any UK tax resident companies that are their related undertakings. Well, it seems straightforward at first glance but with membership of the FTSE 100 being set quarterly, there could, of course, be more than 100 companies in this population for any year ended 31 March.
The second category is more interesting, though. This is essentially the 50 largest companies (aggregated with UK resident related companies) that are not members of the FTSE 100 (actually, I suspect that Murphy means those not included in the first group because this is not quite the same thing) ranked by the value of their “UK taxable profits before the offset of all tax allowances and reliefs”. Isn’t that something of an oxymoron? But wait a minute, if we’re going to exclude tax allowances, shouldn’t we also exclude tax disallowances?
There are further categories but I think you get the picture.
Despite the heading of this Clause, it is actually HRMC that must disclose the tax information, by publishing the CT return of the relevant companies in XBRL format. In XBRL format? I think this Bill is less about actively preventing avoidance and much more about making it easier for those who would wish to analyse in detail the financial affairs of companies to do so.
In his Blog, Murphy suggests that this is about getting HMRC to publish the “tax returns of the top 250” companies. I’d suggest that once related undertakings have been added in and allowing for changes in membership of the FTSE 100, there will be more than 250 returns for HMRC to identify and publish.
There is also a provision requiring HMRC to publish each year (in non-anonymised form) the 250 personal tax returns showing the highest taxable income (after certain deductions). Again, this is really not about preventing avoidance – HMRC will not receive any more information on these taxpayers than before – so much as accessing otherwise confidential financial information.
I am not sufficiently knowledgeable of Parliamentary affairs to know whether a Bill such as this one has any real chance of being enacted. However, it seems to me that, if it is, HMRC is going to have its work cut out complying with all of the additional burdens placed on it. And I can’t immediately see how this will help it increase the tax collected.