U.K. Lawmaker Questions Tax Authority’s Global Cooperation Efforts

Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.

By Ben Stupples

An influential U.K. lawmaker has questioned the tax authority’s efforts to collaborate with other countries following claims it failed to assist in a French probe of a London-based telecom giant.

Treasury select committee chair Nicky Morgan asked for a response to concerns about the U.K. tax authority’s “willingness and capacity to act vigorously on behalf of other countries” in a letter to the authority’s chief executive, released April 25. The claims about the authority’s behavior in the French government’s investigation are “extremely troubling,” she added.

The political objectivity of Her Majesty’s Revenue and Customs came into focus following a media report that claimed it refused to search the offices of telecommunications businesses Lycamobile UK Ltd. as part of a French fraud probe. Emails from British officials noted that Lycamobile is the biggest corporate donor to the U.K.’s Conservative Party, BuzzFeed News reported April 19.

“Given the importance of international cooperation in the fight against economic crime, it is extremely troubling to see press reports that HMRC refused to help another country pursue its investigations into money laundering and tax fraud,” said Morgan, a Conservative lawmaker.

HMRC Response

Led by Morgan, a former education secretary, the Treasury select committee is a panel of U.K. lawmakers appointed to scrutinize the work of the Treasury and HMRC.

Commenting on the Lycamobile probe, an HMRC spokesman told Bloomberg Tax the French government had insufficient evidence to meet the U.K.’s requirements for a search warrant.

Once HMRC rejected the request to raid Lycamobile, it kept working with France’s authorities to explain the legal requirements and offered to meet a French judge to explain them, he said April 25.

“HMRC always investigates suspected rule breaking professionally and objectively,” he added.

Lycamobile is the world’s largest provider of low-cost international calls, according to its website.

In an April 25 email, a Lycamobile spokeswoman said the company denies all claims from the Buzzfeed report. The company hasn’t donated to the Conservative Party since 2016, she added. That year, it donated 50,000 pounds ($69,686), according Lycamobile U.K.’s latest annual accounts.

EU’s U.K. Assistance

The claims of HMRC failing to help the French authorities come as it recoups more tax via European Union members under the trading bloc’s Mutual Assistance in the Recovery of Debt scheme.

The U.K. obtained 5.4 million pounds in 2017 by asking other EU countries to recover unpaid tax debts on Britain’s behalf, a 177 percent increase from the previous year, according to official data.

Bloomberg Tax obtained the statistics through a Freedom of Information Act request to HMRC.

At the same time, however, HMRC has a history of collaborating with foreign tax authorities.

In March 2017, HMRC worked with the French, German, Dutch, and Australian tax authorities as part of an international investigation into Credit Suisse Group AG’s private bank. In addition, the U.K. is a participating country in the OECD’s global data sharing initiative to combat tax evasion.

To contact the reporter on this story: Ben Stupples in London at bstupples@bloombergtax.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bloombergtax.com

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Request International Tax