Tax the little disabled people

Private Eye:

GOOD to see that HM Revenue & Customs knows who the real tax-dodging villains are in Britain. Having let Vodafone and Goldman Sachs off millions in tax (Eyes passim), it’s been commendably ruthless with… a small charity for disabled children.

Wirral Resource Centre in Birkenhead provides physiotherapy and play therapy for around 90 children with special needs, as well as lending toys and equipment to families.

Now the charity has been whacked with a £16,000 tax bill, dating from an accounting error made in the early 1990s when the centre was run by completely different people. The charity has been given a year to find the cash, which will eat up the proceeds of dozens of the raffles, sponsored walks and coffee mornings that usually keep the service afloat.

“This has put a great strain on the centre,” says the charity. “We are having to scale down our staffing structure because of this, so staff will be made redundant. We are in desperate need of funds.” Well done HMRC!

* * * * *

Dave the Jackal

MEANWHILE, why does accountancy firm Deloitte remain such a favourite of HM Revenue and Customs’ tax boss when it is arguably the biggest tax avoidance drain on the British economy?

A parliamentary question from Tory MP David Davis reveals that HMRC’s business-friendly tax boss Dave Hartnett has met Deloitte UK chairman David Cruickshank no fewer than 48 times since 2006. The accountant who appears at the side of some of Britain’s biggest companies, including Vodafone, when they have a big tax dispute to resolve with Britain’s top taxman, was described by Hartnett to a parliamentary committee in March as “one of Britain’s leading tax accountants”.

What the urbane Cruickshank actually leads in is tax dodging. Before stepping up to run the UK firm in 2007 he was, from 1998, in charge of its tax division. Achievements in this period included providing the Inland Revenue with tax advice on selling its offices to a Bermudan company under a contract signed by Hartnett himself. And Cruickhank was named in a government report as the adviser behind the tax avoidance at MG Rover when it was run by the Phoenix 4 directors who have now accepted long disqualifications.

Up to his neck in Slag
Britain’s “leading tax accountant” can also take credit for the abortive Project Slag, designed to dodge £100m and earn Deloitte £10m, and Project Aircraft, under which the car company started leasing aircraft to Thomson Travel purely to soak up tax allowances with the help of Barclays bank.

Under Cruickshank the firm’s tax division, a tribunal recently exposed, also ran a £140m scheme for bankers from Deutsche Bank to dodge tax on their bonuses via a Cayman Islands share scheme.

Such scheming is commonplace though the tax avoidance industry and HMRC contrive to keep as much of it as possible secret. But the Eye has now learned of a new high value scam being punted around by none other than… Deloitte.

Known as the “derivative derecognition” scheme, it involves a company entering a swap contract which has income and expense elements then issuing special shares to its parent company that make the income element magically disappear for tax purposes. Since this exploits tax laws that industry specifically asked for to help investment, even a member of the tax industry told the Eye: “It really is taking the piss.”

Deloitte said: “We cannot comment publicly on any client matters, although we meet all disclosure requirements to HMRC.” One perhaps for the two Daves to chew over at their next cosy chat.

* * * * *

Sack the staff, bring in the robots!

KEEPING its focus on the little people rather than the behemoths, HMRC will soon start spying on taxpayers via the internet to try to identify people making money on the side.

Web robots, or crawlers – bits of data analysis software code – will systematically search through websites looking for key words. The idea is to find the teched-up Del Boys who aren’t paying income tax or VAT when they make nice little earners on eBay and elsewhere.

Meanwhile, the Revenue has told staff that senior officials at the level required to investigate the complex tax dodging ruses of large companies and rich individuals will be… cut by a further 400! The president of their union, Graham Black, said the government is “letting big business off the hook” and “acting like an unhinged Robin Hood – taking from the poor and giving to the rich”.

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