CPAC Seek to Ban Insider Tax Accountants from Government

Ban Insider Tax Accountants from GovernmentTax evasion continues to plague the HMRC, with some MPs looking to ban tax accountants from working within the government. The problem suggested is that outsider tax accountancy firms are brought in to consult work within government, assisting on tax issues, on a contractual basis.

The report indicates that the tax accountants being employed, inside of government are believed to be gaming their positions, by playing cat and mouse in their careers. On the one hand, an accountant is able to spend some time in government, assisting in the areas they’re employed to do.

On the downside, there’s a switch happens, as there are tax firms specialising in tax avoidance schemes. It therefore creates room for exploitation, where tax accountants can gain insider knowledge, and exploit the loopholes they identify, therefore leading to lucrative business in the private market.

That leads to billions of pounds generated by large tax accountancy specialists, with the revenue being lost from HMRC. It’s a battle that’s been ongoing for years, and the call to ban insider tax accountants, is a measure to combat the problem.

Defining the role of a tax accountant

A tax accountant is there to help people and businesses pay the right amount of tax, when it’s due to be paid. They can advise on different ways people can save on tax, but there’s a big difference between tax avoidance and tax evasion.

  • Tax avoidance is what an accountant is hired for, and is perfectly legal
  • Tax evasion is illegal

The grey area is where tax accountants are paid for their specialist knowledge on tax issues. It’s knowing where savings can be put, i.e. sheltered for the purposes of reducing tax costs. While most of us will take advantage of certain tax avoidance schemes, such as cash ISAs, or paying into pension schemes, which are schemes that can be used, as they were set up by parliament for people to make savings.

The problem is with the minority who will go to drastic lengths, misrepresenting their tax returns, and sheltering undisclosed sums in offshore accounts. Tax evasion is when someone deliberately goes about hiding money from the HMRC, as a means to evade paying any tax on income earned.

The grey area is what some refer to as Avoision, and that’s what MPs are looking to address by banning tax accountants from gaining the insider knowledge in the first place.

Other measure proposed by the committee

Beyond proposing a ban on public sector accountants, working within government, then leaving to go private, and advising private firms on tax loopholes they’ve found while working there, MPs are also calling for a higher degree of scrutiny for the people employed in government.

For improvements to the HMRC service, it can’t segregate public from private completely, as the service relies on having industry knowledge, which means hiring staff who are in the field, and know what people are doing. That helps government officials create legislation that’s up to date, to reduce the amount of tax evasion, resulting in millions of pounds in lost revenue, from the public purse.

What MPs of the Commons Public Accounts Committee are further proposing is that anyone who has a service history of providing tax avoidance schemes to clients, should not be employed in the public sector, under any capacity.

Whether the measure will go through is still unknown, but it’s clear that there’s a huge issue with tax evasion, and with millions of pounds being invested into the issue, there’s a clear need for something to be done to clean up the industry.