Dr Stephen Daly

State Aid, a constant in the headlines these days, arises where four conditions are satisfied:

• there has been an intervention by the State or through State resources
• the intervention gives the recipient an advantage on a selective basis
• competition has been or may be distorted;
• the intervention is likely to affect trade between Member States.

On 22 July 2015, it was announced that the European Commission was ordering France to recover €1.37 billion from Électricité de France (‘EDF’). The Commission has found that a tax exemption granted to EDF constituted State Aid. The exemption in the EDF case relates to the treatment of reserves which the energy company had built up between 1986 and 1996 with a view to renovating the high voltage transmission network in France. In 1997 when EDF restructured its balance sheet, the French authorities reclassified some of these provisions as a capital injection without levying corporation tax. It is this tax break which is at issue.

This latest order from the Commission comes against the back of in-depth investigations currently ongoing in relation to purported selective treatment provided by the tax authorities in Ireland, Netherlands and Luxembourg to Apple (IRE), Starbucks (NE), Fiat (Lux) and Amazon (Lux) (on these, I’d highly recommend reading my colleague Dimitrios Kyriazis’ posts-here, here and here). Additionally, the Commission has extended its information enquiry on tax rulings practice to all Member States (initially, the investigation was restricted to just seven).

On an even broader level, this current trend underlines a change in direction of the Commission on issues of direct taxation (a competence reserved to Member States, although this is largely accepted as qualified these days). The Commission now sees a role for itself in ensuring fair tax competition:

“In the worst-case scenario, unfair tax competition could create a race to the bottom, in which countries feel compelled to give handouts to multinationals in the form of tax breaks… This is not an issue limited to a small number of EU countries – it is a European problem needing a European solution. That’s why the commission is planning to present new legislation in the area of taxation… We believe tax authorities should know which companies enjoy favourable treatments in another country… At last November’s G20 summit in Brisbane, it was on President Juncker’s initiative that world leaders committed to transparency on tax rulings… We now have a great opportunity to make tax competition within the EU’s single market fairer and more transparent” (Margrethe Vestager and Pierre Moscovici)

As such, interesting times lay ahead!

But there are two matters which I believe merit further attention.

The first is that there is an implicit assumption in the commentary that the revenue authorities lack independence from Government policy. In each case, it is assumed that the tax collecting bodies are providing selective treatment in order to attract, or keep happy, big businesses. For this reason Vestager and Moscovici fear that “unfair tax competition could create a race to the bottom, in which countries feel compelled to give handouts to multinationals”. Is it necessarily the case that revenue authorities act in accordance with Government initiative on the economy and entreprise? Or might they see themselves as divorced from policy and purely in the business of collecting tax which is due? (Although it is accepted that this is largely a matter of semantics however, as the test is an objective one).

The second is a deeper tension at the heart of the interaction between State Aid law and national tax law. The question is how does the condition of ‘selective advantage’ (the second criterion for State Aid) interact with administrative discretion?

The Commission accepts that there will be a level of discretionary power relating to the “simple management of tax revenue by reference to objective criteria.” It is also accepted that there will have to be the interpretation of general provisions in order to accommodate individual fact scenarios: “as far as administrative rulings merely contain an interpretation of general rules, they do not give rise to a presumption of aid”. The big issue arises in the Commission’s further elaboration on selectivity in relation to discretion:

“If in daily practice tax rules need to be interpreted, they cannot leave room for a discretionary treatment of undertakings. Every decision of the administration that departs from the general tax rules to the benefit of individual undertakings in principle leads to a presumption of State aid and must be analysed in detail”

So, the Commission makes a distinction between on the one hand, interpretation of general rules and application to sets of facts (which is decried as legitimate use of simple administrative discretion), and on the other hand, interpretation and application to sets of facts which is decried as illegitimate where there is a departure from the general rules. This essentially pivots on an assumption that there is such thing as mere interpretation.[1] There is no point in rehashing Hart’s ‘vehicles in the park’ analogy, but I think it can be safely said by tax lawyers that it is very difficult to tell whether complex, layered legislation will apply in any complex fact scenario, and so will require some flexible interpretation from the revenue authorities. The point at which something ceases to be ‘mere interpretation’ is very difficult to pin down in practice. Indeed, there is a significant number of cases which require purposive interpretation of legislation, and so would potentially fall within the Commission’s definition of State Aid.

For the author, this presents a confusing dichotomy, made even more perplexing by the prevailing view today that HMRC in the UK ought to apply legislative provisions purposively to counter tax avoidance. So, how exactly are HMRC to interpret the tax provisions? Is there any scope for avoiding the gaze of the Commission?

[1] And indeed in prescriptive civil law systems, there might be!

In July, the British Medical Association (‘BMA’) has called for a tax of 20% to be added to the cost of sugar-sweetened beverages. The calls comes as part of a package of reforms, such as subsidizing fruit & vegetables and increasing the level of resources directed at education on nutrition, proposed by the BMA to tackle the nation’s poor diet (find a link to the report here). The BMA understands that dietary problems are driven by a combination of factors such as the developmental environment before birth and in infancy; interactions with others; education and health promotion; consumer marketing; stakeholder marketing; access and availability; deprivation and social changes. Accordingly, the body recommends a range of reforms:

A range of comprehensive measures are needed to promote healthier diets among children and young people, from those governing the supply of food and drink products, to policies seeking to modify the demand for specific types of product. A key focus is to tackle the environmental influences that have created a social norm of unhealthy dietary behaviour in the UK. These include the wide availability, promotion and affordability of unhealthy food and drink products. Tackling these influences will help address the modifiable dietary risk factors that underlie the burden of diet-related ill-health.

A 20% tax on sugary drinks as such is just one of the many reforms proposed by the body. The body suggests that there is “evidence of effectiveness of taxation approaches [sic] for sugar-sweetened beverages”. Indeed, the introduction of sugar taxes in Mexico has resulted in a 12% decrease in sales of sugary drinks. This is unsurprising, given that it is largely accepted in the literature that an increase in the price of soft drinks results in a decrease in consumption.[1]

So, that’s it settled then. A sugar tax is all upside.

Well, not quite. One needs to scrutinize these numbers in order to evaluate their impact fully. For if the 12% decrease is purely down to otherwise healthy persons making a rational decision to reduce their consumption of an unhealthy product on the basis of an increase in price, then the tax has failed to achieve its aim. Taking this one step further, if these healthy persons are the wealthier in society, then the dietary behaviour of the poorer members of society will not have changed, meaning the incidence of the tax would fall squarely on them, hence making it highly regressive. Indeed, the BMA accepts the fact that dietary problems in society are largely borne by “individuals from lower socioeconomic groups” and so it is assumed that this group over consumes sugary drinks. Accordingly, any measure designed to reduce consumption of unhealthy foods must focus on changing the behaviour of individuals from lower socioeconomic groups.

The results from Mexico are promising, with a 9% reduction witnessed across these groups. However, it must be stressed that these results are preliminary and subject still to peer-review. Although (h/t Max Schofield) Mexico’s lower house of Congress on Monday approved a proposal to cut the sugar taxes, the amendment was almost immediately overturned by the senate.

The introduction of a sugar tax should ensure in the very least that it actually changes the behaviour of those whose diets are in need of changing. Otherwise, we could have a negative redistribution of money, which in turn could be further exacerbated if the effect of subsidizing fruit and veg would be to benefit the wealthier in society (who already account disproportionately for the purchasing of fruit and veg). The ultimate lesson to be derived from all this is surely that a sugar tax should not be taken as a solitary measure in the fight against obesity, nor was that the recommendation of the BMA when originally proposed. The combination of financial incentives, education, labelling information, and tackling exploitative marketing should be deployed to tackle this problem.

[1] Andreyeva T, Long MW & Brownell K (2010) The impact of food prices on consumption: a systematic review of research on price elasticity of demand for food. American Journal of Public Health 100(2): 216-22.

The Home Secretary Theresa May is said to be proposing immigration reforms which will prevent non-EU students from working whilst studying in the UK, will force those students to leave immediately on finishing their courses and prevent dependents or spouses from working in the UK (although only those who accompany persons studying for more than one year are entitled to do so at present). Such an announcement is going down like a lead balloon for those in the Higher Education sector who see these latest proposals as yet another shot in the foot, given that education is one of the UK’s key exports.

May’s justification for introducing the measures is that of the 121,000 non-EU students, who arrived last year, only 51,000 left the UK, leaving a net influx of 70,000. The underlying policy, to crack down on visa fraud, is misaligned both with these reforms and with this justification.

Who exactly are these students who stay on in the UK after their degrees? Let’s take a look at the University of Oxford’s Law Faculty to see how many of the Law Faculty Posts are held by British/EU academics (see here). There are 43 Professors on this list, of who over a quarter are non-EU academics. These are some of the world’s most renowned, respected and exciting legal scholars. Think about that for a second. Or indeed, imagine the field of legal philosophy in the UK if it had been deprived of the teaching of (non-EU) greats like Joe Raz, Ronald Dworkin, Jeremy Waldron, John Finnis, John Rawls (to name a few). Or how boring life would be without Germaine Greer or how the Courts would have missed a presence like Lord Hoffmann?

Who exactly would want to deprive the UK of such persons by making it harder for them to stay and sending a message that they are not welcome anyway? Arbitrarily cutting numbers on the basis that ‘immigration is too high’ fails to appreciate the very clear beneficial impact of highly educated international persons on the UK. By all means, deal with Visa Fraud. But don’t link the entire net influx of 70,000 ex-students to it. Don’t shoot the goose who lays the golden egg.

Given that the measure had been flagged for some time, few should have been caught off guard on Wednesday when George Osborne announced the effective increase in the Inheritance Tax threshold to £1mil by 2020. For those wondering why he decided to do so, one need look only at the popularity of the tax: people just do not like it! Indeed it was 2007 when Gordon Brown was forced to resile from calling a snap election because the Conservatives had promised to introduce this threshold if elected.

And now, we’re at a bit of a crossroads with the tax. As it stands, Inheritance Tax will only fall on the 37,000 wealthiest estates. In terms of tax take, last year it brought in just £3.7bn, which is very low in comparison with other taxes (for instance, VAT brought in £108bn alone). So in absolute terms, it is now a tax paid by very few people and brings in very little revenue. The Conservatives are certainly not going to reverse this trend and one posits that, given what occurred in 2007, Labour will not touch it either.

All of this is to be regretted. Inheritance Tax, whilst utterly flawed in the UK in practice, is not devoid of justification in principle. It is a wealth tax, and could be an equitable way of generating revenue for the exchequer from unearned income, rather than relying so heavily upon taxing earned income.

But right now, as has become clear, it’s brand name is toxic. What to do with a toxic brand??

I like that tax is headline-grabbing these days: if for nothing else, people are much less apprehensive now when I tell them I’m doing a PhD on tax law! On Sunday, Simon Bowers reported in the Guardian on the OUCBT Annual Summer Conference and the “controversial” remark made by Philip Baker QC on Corporation Tax. Baker, an international tax expert and one of its most entertaining orators opined that governments do not drive corporate tax policy, but rather that companies do:

“I don’t think in the last 20 years or so one can say that governments have driven corporation tax policy. It’s the large companies that have driven the direction of corporate tax policy”

A skilled advocate, Baker’s comment is laden with nuance: he did not say that corporations make tax policy, nor that governments wholesale adopt measures recommended by companies, and importantly, he refused to say that governments have absolutely no autonomy in the matter, citing the DPT as an example of such independence. The important emphasis in the excerpt is on the idea that corporations “drive” the direction of policy. In our globalized world, in which the revenues of some corporations surpass the GDPs of developed countries (for instance, Walmart is bigger than Norway), it should come as little surprise that they have considerable bargaining power. Of course governments today are cautious about unduly upsetting corporations as a result and so indirectly, mobile corporations exert influence on governments to adopt measures which are not contradictory to their interests.

And so it might be said that Baker’s controversial statement isn’t actually all that controversial…

Disclosure seems to be the call of the day, so I’ll begin this blog with a disclosure. I am now a card-carrying member of the Fabian Society. My previously placid, politically neutral self was shocked into action by the revelation that many of my lawyer friends in the General Election had voted Conservative.

Don’t take this as an intimation that I now believe in tribalist, partisan politics. Because I don’t. I hate it. In the words of Chris Rock:

Anyone that makes up their mind before they hear the issue is a fool. Be a person. Listen. Then form your opinion. No normal, decent person is one thing. I’ve got some stuff I’m conservative about, I’ve got some stuff I’m liberal about.

But now, I have heard the issues and the Conservatives have crossed a line that I cannot in good conscience cross. For the time being, I believe that they are not the right party to run the country and would rather see Labour in power. Not because of economics, but because as a lawyer, it seems incomprehensible to me that my fellow legally trained friends would vote for a party that would seek to restrict judicial review, rescind the Human Rights Act and continue to cut legal aid. These moves do, and will, have radical consequences on the constitutional foundations of this State, the protection of which should usually spur politicians to act cautiously, and, for want of a better word, conservatively!

And so I joined the Fabian Society in order to attend the hustings of the potential Labour leaders last weekend. In the packed out, stuffy, basement hall of UCL’s Institute of Education in the otherwise glorious Bloomsbury district of London, around the corner from a plaque which marks the one-time home of John Maynard Keynes, Andy Burnham, Liz Kendall, Yvette Cooper, Mary Creagh and Jeremy Corbyn were asked a series of questions from the crowd about their vision for Labour. The final question asked was whether “Socialism was dead”? The prospective leaders gave their answers:

Certainly not. Now, more than ever, we need to make the case for security. Labour should speak to the aspirations every family has. Ed Miliband was right to focus on this issue at the election. But we need more convincing answers (Andy Burnham)

The fight against inequality is more important than ever. That is why we need a Labour party. That is what Labour is for. But we should not shame the work-shy (Yvetter Cooper)

We have to make sure that, as one world, we can stay together (Mary Creagh)

Socialism is not dead, but it needs to change. We need to be as passionate about wealth creation as about inequality (Liz Kendall)

Socialism is alive all over the world. But socialism is not the same as statism. When socialism emerged, it was community-focused. The most popular institution in Britain is a socialist one, the NHS. We should defend the principle of from each according to their abilities to each according to their needs (Jeremy Corbyn)

Now a further disclosure, contradictory to my Fabian membership: I don’t believe in Socialism, well at least socialism as I thought it was defined. For me Socialism is about mass state ownership. It’s about putting the State at the centre, holding it out as the best body to provide for the people. That particular model is of course attractive in theory and as an alternative to the current system which is still beset by seriously destructive issues of class and inequality. I am also sympathetic to a Marxist reading of history-for that particular philosophy helps explain rather well how we’ve arrived at the status quo.

But in practice, unfortunately, Socialism has yet to earn its credentials.

And so, with much reluctance, I arrive at the conclusion that the markets are generally better at providing for the people. But this is not absolute.

There are some areas in which the State is actually better placed, such as in Education, Transport and Health-areas in which the pure concentration of profit-seeking organisations would result in unconscionable class discrimination, destruction of remote communities, and impoverisation of persons with shallow pockets who through unfortunate circumstances have found themselves ill. The State ought also to be positioned to temper the excesses of Capitalism: to provide a social net below which people cannot fall; to add progressive layers to reduce the inevitable inequality which follows dysfunctional markets; to introduce labour laws to prevent the exploitation of workers; a minimum wage to ensure that people can have dignified lives etc. These endeavours are better placed in the hands of the State, rather than profit seeking bodies. So in this model, the market is at the centre and the State an intervener.

And now, through these disclosures, I propose a hypothesis: I suspect this is the form of the State which all the prospective Labour leaders believe in also, but to varying degrees, Jeremy Corbyn being the most interventionalist to Liz Kendall being the least. What I sincerely dislike however was the hollowness of the answers which they all provided to the question about Socialism. They all toed the line in order to appease both flanks of the Labour party-old and new. And its exactly this trait in the current Conservative party which led me to Labour in the first place-the pandering of David Cameron to the far right flanks that would rather the Government weren’t inconvenienced by pesky judicial review actions, human rights, and criminal lawyers.

And so I lament, and long for a time that politics is less, well, political…

(19 July 2015, ed: It’s been pointed out to me (via Twitter, what a time we live in!) that, for Marx, socialism was about common ownership and not state ownership. However, socialism as expressed by the potential Labour leaders is indeed about the ‘Big State’, and so it was on that definition I blogged)

A little over 3 years ago, three days before I was to sit my final exam, namely ‘Equity and Trusts’, my car was broken into and my schoolbag stolen. Irony of ironies, my schoolbag was empty for all but Equity notes-so, all the robber got was a good lesson in ‘fairness’ (for lay readers-Equity is essentially about fairness).

Equity itself is quite a curious topic, traceable back to the 12th century, and comprises a body of maxims which “reign over all laws”. Maxims include “those who come to Equity must come with clean hands”, “Equity sees that as done what ought to be done” and (importantly for our purposes as will become clear) “equity does not act in vain”.

I give this brief background because on Thursday the 28th of May, revelations were made in the Irish Parliament about an injunction which has been granted preventing the Irish media from reporting on a purported benevolent agreement between IBRC (a nationalised bank) and Irish media mogul Denis O’Brien. As a result of this injunction, the Irish media are not even reporting on the revelations which were made in Parliament (although an argument has been made here by Seán Ó Conaill that the issue can be reported). A good synopsis can be found here.

Injunctions are remedies which are issued by the courts pursuant to this equitable jurisdiction and accordingly are derived from the aforementioned equitable maxims. The important maxim for the purposes of this post is “equity does not act in vain”, as it may be important for the upcoming legal challenge to the current injunction being heard on Tuesday.

In 1985, former MI5 officer Peter Wright attempted to publish an autobiography, Spycatcher, chronicling his time as a secret agent, in defiance of the duty of confidence he owed to the Crown in relation to his services. The British Government immediately banned the publication from being released and obtained several injunctions precluding the media from reporting the national secrets contained in the manuscript. The book however was published and released overseas (it even reached the best-seller list in US) and, although not stocked in the UK, was privately imported in mass numbers. Accordingly, given the futility of the injunction, The Guardian and Observer sought to have it lifted. The House of Lords, by a 3-2 majority, decided that the injunction should remain in place for the time being, despite the acknowledgment that the order was effectively redundant (see for instance, Lord Ackner [1987] 1 W.L.R. 1248 at 1307). To this, Lord Oliver issued a powerful dissent:

[As] the proscribed material is available for public ventilation and discussion by everybody except those subject to the existing restraint, I question whether it can be right to continue that restraint against parties in no way concerned with flouting the court’s orders and to interfere with their legitimate business of publishing and commenting upon matters already in the public domain ([1987] 1 W.L.R. 1248 at 1318)

In the subsequent case ([1990] 1 A.C. 109) on whether there should be a permanent injunction, the House of Lords rejected the Attorney General’s case by a 4-1 majority and lifted the injunction. Lord Keith did so “[not on the basis of] any balancing of public interest nor upon any considerations of freedom of the press, nor upon any possible defences of prior publication or just cause or excuse, but simply upon the view that all possible damage to the interest of the Crown has already been done by the publication of Spycatcher abroad and the ready availability of copies in this country” ([1990] 1 A.C. 109 at 260)

Lord Brightman was similarly opined that the injunction no longer served any useful purpose in preventing the dissemination of the national secrets as the information was already in the public domain:

But if the matter sought to be published is no longer secret, there is unlikely to be any damage to the public interest by re-printing what all the world has already had the opportunity to read ([1990] 1 A.C. 109 at 267)

Lord Goff likewise followed on the basis that granting a permanent injunction would be redundant:

On any sensible view the information contained in the book was, at the date of trial, in the public domain. For this reason alone, in my opinion, the injunctions against the “Observer” and “The Guardian” should now be discharged ([1990] 1 A.C. 109 at 290; Lord Jauncey agreed at [1990] 1 A.C. 109 at 293)

There is an important lesson in this Spycatcher tale for the injunction which is currently constraining the Irish media. The revelation which was made in Parliament is freely available on the Government’s website. Similarly, although the Irish media is injuncted, the British media may freely release details about the issue, which renders the injunction particularly futile given the free-flow of information via newspapers websites which don’t have a paywall (such as The Guardian). Given such a state of affairs, it is arguable that the Irish Court next week should lift the injunction as the House of Lords did in Spycatcher, not because the information is in the public interest per se (although it clearly is, and that makes the case for releasing the information stronger in and of itself), but that to maintain the injunction is futile. Surely the Irish courts will follow the equitable maxim that equity does not act in vain.

Postscript: Of course, if my legal analysis here is slightly flawed, it is only to be expected given that I don’t have my Equity notes to consult!

Two friends recently attended the Magistrate’s Court in Westminster and arrived back with tales of TWOCing. My initial thought, that this was the latest permutation of a Miley Cyrus dance routine, was of course incorrect. The acronym in fact stands for the crime of ‘Taking Without Consent’, essentially joyriding. It was introduced amid concern at the fact that ‘joyriding’ could not generally be prosecuted as ‘theft’, the ailment in chief being the requirement of demonstrating that the defendant had the intent to permanently deprive the victim of their car. This new crime carries with it a lower charge, but also crucially a lower burden of proof. It is merely necessary to demonstrate that the defendant has knowingly taken a ‘conveyance’ without the owner’s consent.

I bring this up because it is relevant as regards the minute prosecution of tax evaders. Many have asked why so few have been prosecuted in relation to the HSBC revelations. The issue is not unique to tax. Indeed, it has been a consistent criticism of Criminal Law generally and the manner in which it is exercised that it favours prosecution of blue collar over white-collar criminals. Recent history is replete with examples of such a trend.

To this end, Jolyon Maugham has contrasted the rigour with which HMRC pursues ‘benefit fraudsters’ as against the soft approach, such as the Liechtenstein Disclosure Facility, taken to those with offshore bank accounts.

By way of reform then, perhaps we might introduce a strict liability crime or special juries. Both are certainly remedies to the clear problem of failing to bring white-collar criminals to justice. However, their radical departure from the traditional tenets of the criminal law should not be taken lightly.

As for the former, there are merely two parts to a crime-the act and the intention. Strict liability removes the latter requirement and is traditionally reserved for those crimes wherein the very act definitively signals the intent, such as drink driving for instance. However, in an increasingly globalized world, one might be cautious as to whether it is such a case that the mere holding of a bank account offshore evidences the intent to evade tax. I don’t doubt that it might, I am just flagging up how serious an assertion it is and how significant a departure from the usual order of crime it is.

As for the latter, juries are made up of our peers. The orthodox justification for ordinary juries is that in order to be convicted of a crime, the prosecutors must convince a cross-section of society that one is guilty. Where this is done, there is legitimacy in punishing the convicted. On the other hand, if the jury is not satisfied, then society has not been convinced of the guilt of the crime. Imposing special juries departs from this broad normative justification. It introduces a standard whereby, to be convicted of a crime, it is necessary merely for a group of similarly thinking people to be convinced of the party’s guilt.

Both suggested reforms are of merit. What I believe however is that they are quite radical as initial steps to be taken. Perhaps a middle ground solution ought first to be considered before jumping to such reforms. The case of TWOCing may be of interest in this regard. A new crime could be introduced, with a lower standard of proof required but with a corresponding reduction in penalty, for instance such as ‘Negligently failing to disclose an offshore bank account’. Although this solution would not ensure that white-collar criminals feel the full force of the law, as we might certainly think as ought to occur, it would at least be a solution which would bring at least some justice to bear. If such an innovation however proves itself to be inefficient, at that point it would be more appropriate to introduce more radical reforms. This idea of a pragmatic middle ground compromise has been utilized elsewhere (as in Competition Law with Leniency for cartelists).

The TWOCing suggestion should not be dismissed too lightly, for a case study on the issue is quite revealing. TWOCing is traditionally a crime committed by blue-collar criminals. To this end, perhaps the reason that blue-collar criminals are more routinely prosecuted than white-collar criminals is due to the fact that blue collar Criminal Law has adapted to the exigencies of the time, whilst white-collar Criminal Law has been historically unsophisticated. To this end, a first port of call should be to innovate in the law, rather than depart from its traditional, fundamental tenets.

“Make £30,000 and they will hound you until the cows come home; make £30,000,000 and you tell them how much you’d like to pay”

Most of us engaged in tax will at one stage have heard this phrase (or some variant) uttered in disdain. The perception that big companies and wealthy individuals get an easier ride from HMRC than the rest has, although around since time immemorial, become an issue of considerable force today. Public confidence in the administration of the tax system is undoubtedly at an acutely low ebb, as I’ve written about elsewhere on this blog (see: here). Where such arises, as the courts have indicated, HMRC is justified in taking steps which would ordinarily be beyond the body’s powers, such as disclosing taxpayer information, in order to correct the perception.

Public confidence in the administration of the tax system is one of the most important issues that any government will face. Most people’s relationship with the rule of law is that they can avoid engagement with authorities by following the rules. In other words, if you don’t commit a crime, you generally avoid being hassled by the police.

Tax is a unique case wherein such a privilege does not exist, wherein merely following the rules necessarily requires engagement with the authorities. So there is a positive duty in relation to tax law which is distinct from the prevailing interaction on the part of citizens with the rule of law which, on the contrary, merely requires negative action. This is why public confidence is an integral part of tax collection: people must take positive steps to comply with the law and largely do so because there is a sense that one’s neighbour is doing likewise. If there is a sense of a tiered system, whereby one’s neighbour in a horizontally similar position gets favourable treatment from the revenue collecting body, one might be less inclined to comply fully with the law.

To this end, Labour’s proposal for a review into HMRC’s management of investigations, prioritization of resources and leadership on avoidance/evasion appeared to be a sensible alternative to persisting with a drip feed of revelations about HMRC’s conduct which appear to further undermine public confidence in the system (and as I’ve indicated allow for departures from the traditional understanding of the right to privacy and the duty of confidence). Twitter has picked this issue up again today, with Jolyon Maugham posting an article from Bill Dodwell of Deloitte on the issue. It remains a sensible proposal, perhaps particularly so given that HMRC is now a decade old.

It will be important however that, if this proposal is taken up, there is a realistic mandate for the review. This should be a review of the process of decision-making rather than the substance of decisions made. It should look acutely at measures that can be made to increase public confidence. It should look at increasing transparency. Most importantly, the review should be used as an opportunity for HMRC to identify the biggest issues it faces in seeking to enforce the law and for HMRC to make its case as to why it should be trusted as the normatively best body to perform the fundamental duties of tax collection.

On the 1st of April it was announced in The Guardian that Jeremy Clarkson had embraced the drive for fossil fuel divestment, a far cry from his previous position as climate-change skeptic. Given the day that was in it, it was immediately apparent that such was a ‘classic’ April fools day gag.

It seems as though, however, newspapers were not given the memo that April fools day only lasts for 24hours. Over the past few weeks, I’ve noticed many headlines that are similarly out of whack. How about the Finance Act, one of the longest and most complex in history, being debated in Parliament for a mere matter of hours? That must surely have been a joke!

I can only assume that another tongue in cheek development is that both major political parties, the Tories and Labour, have made claims that they shall reign in some £5bn and £7.5bn in revenue respectively from clampdowns on tax avoidance and evasion, without substantiating the basis for believing that such will be possible.

To that end, it cannot have gone unnoticed that whacky headlines have encircled political pledges more generally in the run-up to the general election. Look at the Tories pledging to increase the (highly emotive) inheritance tax threshold on family homes to £1m (even though this will affect very few people) in a search for votes, but to be paid for by reducing tax relief on pension contributions. Look at Labour on the other hand and you will find a party (radically?) proposing a mansion tax (again affecting a mere handful of people) in search for votes, as opposed to introducing some real change on the highly regressive council tax system. Look at both major political parties making assurances that the NHS will be safeguarded without seriously tackling the fact that it will need at least some £8bn in funding per annum. The satirical effect of these headlines is only further heightened by the collective pledges not to increase certain taxes.

If it wasn’t already clear that all these headlines were spoofs, one might be worried about the current state of politics. Thankfully, however, the major political parties continue to eschew unconstructive partisan political one-upmanship on tax and finance. Now, as April fools day is long over, I wonder if the newspapers could please refrain from continuously publishing such ludicrous stories…