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HMRC denies misleading MPs about tax evasion by contractors | HMRC

A group of lawmakers accused HM Revenue & Customs of “cheating” a parliamentary committee and possibly breaking the civil service code, with withholding “embarrassing” information about how he had hired at least 15 contractors who used tax evasion schemes while working for the tax agency.

In a report released on Wednesday, the all-party group of MPs and peers said HMRC put the management of its reputation “before telling the truth.”

HMRC rejected the request, saying its executives had not misled parliamentarians and that it was possible for entrepreneurs to use such programs without the involvement or knowledge of the organization that hired them.

The dispute concerns “loan fees,” a government measure originally announced in 2016 that aims to recover unpaid taxes from people who HMRC says have used so-called “disguised compensation” tax evasion schemes.

In these often complex programs, external contractors – ranging from IT specialists to locum nurses – were paid through loans rather than salaries, avoiding the usual income tax and insurance arrangements. national.

Bickering over the issue has raged for years, with allegations that many people have been unfairly landed with “life-changing” claims, even though they often thought they had little or no help. no choice but to participate in these programs.

HMRC’s position has long been that these devices “don’t work” and that it has been warning against the use of tax evasion schemes for years.

The All-Party Parliamentary Group on Borrowing Costs is made up of MPs and peers who have “concerns” about this issue, and its secretariat is staffed and funded by the Borrowing Fees Action Group campaign. . The parliamentary group has now issued a letter and report on HMRC’s use of contractors using disguised pay schemes, including agreements subject to loan fees.

The group said freedom of information requests revealed that at least 15 contractors using disguised compensation schemes worked for HMRC and its wholly-owned Revenue and Customs Digital Technology Services (RCDTS) between 2016 and 2020, and that as of July 2020, HMRC and its subsidiary still had a contractor using one of these programs.

The report stated: “It is clear that there were indeed contractors working for HMRC, as well as government departments, using loan agreements. The fact that HMRC has attempted to evade questions on this matter is shameful and, in our view, a clear attempt to seek to cover up this embarrassing fact. “

He added: “The whole farce of the loan fee fiasco is surely not demonstrated more forcefully than by the fact that HMRC itself was using contractors engaged in what they now claim to be breakout arrangements. “aggressive” and “flawed” tax. In addition to not having acted at the time to shut them down, it also follows that HMRC was therefore also involved in such tax evasion arrangements. “

HMRC had already been questioned on several occasions, including by the House of Lords’ Economic Affairs Committee in late 2018, whether it had employed contractors using such arrangements, and the report claims the collection agency des taxes refused to answer this question directly.

Rather, the HMRC had, according to the report, “put the management of its reputation and public relations before telling the truth, including to the point of providing statements designed to give a misleading impression and to cover up the truth when discovered it. This is simply not acceptable to a government agency and may… represent a violation of the civil service code ”.

A spokesperson for HMRC said: “Senior HMRC leaders have not misled members of the House of Lords, and we have never endorsed or participated in disguised pay tax evasion programs. It is possible for entrepreneurs to use disguised compensation without the involvement or knowledge of their employer. Whenever it is or has been discovered that a contractor providing services to HMRC or RCDTS is currently using a disguised remuneration system, we have acted and will act promptly to terminate the commitments concerned.

The spokesperson added: “We continue to warn people about the risks of using tax evasion schemes, and our advice remains the same – if something sounds too good to be true, it almost is. certainly the case. “

Margarita W. Wilson

The author Margarita W. Wilson