Accountants’ savings of squillions, huge salaries and far-off buried booty elicit much growling from Margaret Hodge
Fear the wrath of Hodge! On Thursday four experts in tax avoidance (not tax evasion, definitely not!) were up before the public accounts committee, and its ferocious chairperson, Margaret Hodge. Mrs Hodge has won parliamentary awards for her ferocity. She resembles Kipling’s Himalayan she-bear, who is more deadly than the male. We need a verb, “to hodge” – to treat witnesses with lip-curling contempt for nearly three hours.
You almost had to feel sorry for them, until they all, rather sheepishly admitted to getting huge salaries. One, John Dixon, of Ernst and Young, said he earned more than £1,000,000 a year, yet I have to say he looked as if he dressed in donations left outside charity shops.
Mrs Hodge was not happy. She pointed out that they earned mega-spondoolicks by devising schemes so their customers, giant multinationals for the most part, could avoid giving all but the meanest sums to the taxman.
She was incensed by their use of offshore tax havens. Deloitte’s, for instance, had 160 people working in the Cayman Islands, population 56,000. What did they all do?
“Auditing,” said Bill Dodwell.
“Local firms?” asked Mrs Hodge.
“Both,” said Mr Dodwell.
Leaving us to wonder who got most attention from the Deloitte lads, the Tipsy Turtle bar on Cayman Brac, or, say, Megacorp Inc, with its $2.7bn annual turnover.
Mrs Hodge waved a sheet of paper depicting “the most complex, extraordinary company structure” for a firm called Carlisle, which had set up two subsidiaries in Jersey and another in Luxembourg. “The purpose is, in your words, to minimise tax, and in my words, to avoid tax.”
The four, three men and one woman, were confused. They wanted to scream, “Yes! We save companies squillions! We’re brilliant!” But the committee room was not the place to scream it.
One of the main wheezes they use is something called “transfer pricing”, which seems to mean tucking money away where the UK tax people can’t find it. You will not be surprised to learn that the Big Four accountants have between them three times as many people fixing this for their clients as HMRC has to examine it.
The quartet did recover some poise at the end, when Mrs Hodge addressed them in the manner of a disappointed careers teacher. They were all highly clever people, well remunerated and very experienced.
“What really depresses me is that you could contribute so much to the public good, but you choose to work in a field that prevents us spending money on schools, hospitals and our transport infrastructure.”
Two of them replied that they were “very proud, we make a fantastic contribution to society”.
Richard Bacon MP said that, yes indeed, they did perform a service. By depriving the government of money that might otherwise be wasted, they made ministers spend what they did have more responsibly. But I think he was being sarcastic.
If so it may have been lost on the tax avoiders, who left without actually whimpering, even though they had been well and truly hodged.