Jim Pickard Exclusive: PAC mulls probe into companies’ tax affairs

Members of the influential Commons’ public accounts committee are considering mounting an inquiry into international tax avoidance amid rising political concern about the issue, the FT has learned.

The move, which will be decided within days, could see executives from major global companies in the spotlight as they are questioned by MPs over their corporate tax arrangements.

There has been some tension between members of the Treasury select committee and MPs on the PAC, with some of the former thinking the latter should limit itself to examining NAO reports. But this looks to be resolved shortly.

David Cameron on Wednesday raised the political temperature over tax avoidance further as he warned large international companies paying low tax rates in the UK that they faced investigations by HM Revenue and Customs.

Mr Cameron was asked about the issue by Margaret Hodge, chair of the PAC, during the weekly prime minister’s questions in the Commons.

“Jimmy Carr avoided £3.3m of tax last year and the prime minister said that was morally wrong,” said the Labour MP. “Apple, Google, Facebook, eBay and Starbucks have avoided nearly £900m. Will the prime minister now take this opportunity to condemn their behaviour as morally wrong?”

Mr Cameron replied that there was an “international problem” of how governments could ensure companies paid the appropriate amount of tax.

“I’m not happy with the current situation, the HMRC needs to look at it very carefully,” he said. “We need to make sure that we are encouraging these businesses to invest in our country – as they are doing – but they should be paying fair taxes as well.”

Mr Cameron’s comments come amid wider pressure in Westminster and beyond on companies to pay more tax. “People expect major companies that are household names to
pay their fair share of tax,” said Pat McFadden, a Labour member of the Treasury select committee.

Later, the prime minister’s spokeswoman said the issue was something that the prime minister felt strongly about. “HMRC are looking into it,” she said.

However, the HMRC said that it could not disclose which companies it was investigating or not because it was bound by “customer confidentiality”.

“For legal reasons we cannot comment on the tax affairs of individual businesses, but we make sure that multinationals pay the right tax to the UK in accordance with UK tax law,” it said.

Meanwhile, Peter Lockhart, national officer for the PCS union, warned that the revenue had lost many staff amid budget cuts. “There is a fairly high attrition rate in HMRC and I think that’s connected with aspects of staff morale,” he told the Treasury committee this afternoon.

Starbucks, the latest name to find itself in the tax avoidance spotlight, told the FT this week that its low corporate tax in the UK was because of overexpansion. Troy Alstead, finance chief of the global coffee chain, revealed that HMRC had “heavily scrutinised” a 6 per cent royalty payment to its regional headquarters in the Netherlands, which reduced its taxable income. However, he said this charge was normal for a multinational retailer with overseas headquarters.