An undercover investigation by Channel 4’s Dispatches programme, due to air tonight in the UK at 8pm, notes among other things that Phil Hodkinson, a non-executive member of the HMRC board, is also on the board of Resolution, the FTSE 100-listed, Guernsey incorporated company that is the parent of Friends Life and Friends Provident International.
The programme does not accuse either of the HMRC directors it focuses on of breaking the law, but points out that tax avoidance has become an issue recently, with Prime Minister David Cameron and Chancellor George Osborne referring to it as "morally wrong" and "morally repugnant".
A number of major UK newspapers, including the Sunday Times and Mail on Sunday, ran stories yesterday based on advance information contained in the programme, which is called Secrets of the Taxman.
Both the Times and Mail articles referred to Guernsey, which is where the alleged offshore structures referred to are located, as a "tax haven", a term that it and a number of other offshore financial centres dislike having applied to them.
Among the other allegations said to be featured in the programme:
- Hodkinson, who is chairman of HMRC’s ethics and responsibilities committee, earns more than £100,000 a year from his Resolution directorship
- John Spence, who until recently was a non-executive board member at HMRC and chaired its audit and risk committee, is the non-executive chairman of SpicerHaart, a property company which is said to have helped wealthy individuals to avoid stamp duty on house purchases.
- HMRC has awarded a contract for collecting unpaid tax to a company that is Guernsey owned.
In an interview with the programme, MP Margaret Hodge, chair of the Public Accounts Committee, is reportedly shown saying that no non-executive director on any government body should be associated with any schemes to potentially avoid tax, and, according to a Dispatches press statement, promises to challenge the HMRC on the findings.
Resolution did not return phone calls seeking comment on the matter. However, in a statement, Dispatches reports that the company refuted the statement that it was based in Guernsey in order to reduce its tax bill, adding: "A Guernsey domicile provides Resolution Ltd with more options than the UK for the ways in which it can fund the purchase of a business and return capital to shareholders following the sale of a business."
Dispatches also quotes Hodkinson as responding to its report by saying: "As I sit on the board of HMRC, it is especially important to me that the motivation for Resolution being based in Guernsey is not tax avoidance.
"I have kept HMRC fully informed of … my role at Resolution and its status as a Guernsey company.
"I am therefore entirely confident that my roles with HMRC and Resolution do not in any way represent a conflict of interest.”.
A spokesman for Guernsey Finance, which represents the island’s financial services industry, said the organisation was waiting to see the programme before commenting on it.
A spokesman for HMRC said it “rejects the suggestion that the outside roles of our non-executive directors are incompatible with their roles on HMRC’s board".
He added: "Based on the information that Dispatches sent to us, HMRC is satisfied that none of the issues raised regarding the conduct or activities of our non-executive directors in their external roles represents a conflict of interest.
"Non-executive directors bring valuable external and commercial experience to HMRC’s board, and when we employ people with experience of the private sector, it is partly to harness their skills and knowledge in our drive to tackle rule breaking.
"HMRC is very successful in challenging tax avoidance, protecting billions of pounds for the Exchequer. In the past two years alone we successfully litigated around 45 major tax avoidance cases in the courts, and we currently have around 8,000 more companies in the pipeline awaiting litigation."
More information about the programme may be found on the Channel 4 website by clicking here.
