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Friday, April 20, 2018

The bizarre refusal of HMRC to co-operate with a criminal inquiry

I have spent three and a half decades dealing with the authorities, whether it is the local council, a health board, the Welsh Government, the UK Government or one of the many agencies that exist to deliver services to the public. And yet I have never seen anything like this.

It is no wonder that MPs are to investigate an HM Revenue and Customs decision to turn down a French request for help with a criminal inquiry into a major Conservative party donor given the circumstances of the refusal.

As the Guardian reports, the Treasury select committee and the public accounts committee want to explore why tax officials rejected a request from the French authorities to help with an inquiry involving the mobile network operator Lycamobile. It follows the disclosure on Thursday that the tax authority had sent correspondence to its French counterparts which pointed out that the telecoms company was the “biggest corporate donor to the Conservative party”:

Lycamobile had donated more than £2.1m to the Conservative party until French police two years ago launched an inquiry into alleged criminal activity by individuals at the company. No legal proceedings have been taken against Lycamobile itself.

In March 2017, French officials asked HMRC to assist with investigations in the UK, but the request was refused.

The parliamentary investigations have been launched after correspondence between British and French tax officials was leaked to the news website BuzzFeed.

One letter, sent to French officials from the team at HMRC that handles law enforcement requests from foreign governments, said: “It is of note that they are the biggest corporate donor to the Conservative party led by Prime Minister Theresa May.”

A spokesman for Lycamobile said: “Lycamobile has not contributed to the Conservative party since July 2016. Lycamobile continues to deny all allegations being implied by BuzzFeed.”

Serious as this is, the U-turn performed by HMRC's spokesperson, as reported by Buzzfeed, defies satire:

When BuzzFeed News first approached HMRC to ask about its response to the French request, the agency’s senior press officer strongly denied that Lycamobile’s donations would ever be cited as a reason not to conduct criminal raids. “No HMRC official would ever write such a letter,” he said. “This is the United Kingdom for God’s sake, not some third world banana republic where the organs of state are in hock to some sort of kleptocracy.”

However, after verifying the contents of the email seen by BuzzFeed News, another HMRC spokesman said that it was “regrettable”.

Perhaps we are living in a banana republic after all.
There is an alternative explanation for the HMRC's stonewalling the French, though not necessarily an any more respectable one. According to the current Private Eye, Lycamobile may owe £32.7m to HMRC over disputed VAT. The company has also been avoiding UK tax through a firm in the low-tax Portuguese island of Madeira, which could be caught by the diverted profits tax introduced in 2015. Our taxman may want to make sure of first dibs on the Lycamobile funds before the French get a crack at them!
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