The Chief Executive of HMRC, Jon Thompson, received a knighthood in the New Year’s Honours list. Mr Thompson, who has held the top role at HMRC since 2016 after spending three years as the Permanent Secretary at the Ministry of Defence, was recognised for his thirty years of public service at the end of December.
On receiving the honour, which ‘recognises the achievements and service of extraordinary people’, Mr Thompson spoke of his pride; “The civil service has a wealth of talented and respected individuals and leaders, and I am proud to have spent the majority of my career working amongst them.”
While holding the Chief Executive position at HMRC, for which he reportedly earns between £205,000 and £210,000 per year, Mr Thompson oversaw the implementation of IR35 reform in the public sector in 2017. He is also poised to manage the introduction of similar changes in the private sector, which the Government announced will arrive in April 2020.
Following a House of Lords report into the powers of HMRC that concluded the taxman is aggressive and treats taxpayers unfairly, the news of Mr Thompson’s knighthood has received criticism from a number of tax experts. Chloe Westley of the Taxpayers’ Alliance, for example, called it ‘over the top’.
That Mr Thompson has been acknowledged for his contribution to the UK tax system while global internet companies continue to avoid paying a proportional amount of Corporation Tax on these shores did not sit well with a member of the Treasury select committee either. Stuart Hosie of the SNP does not believe Mr Thompson deserves this ‘so-called honour’ until ‘HMRC has managed to tax the tech giants properly.’
In recent years there has been growing discontent among UK taxpayers with regards to the tax avoidance measures taken by the likes of Google and Amazon. HMRC, and Sir Jon Thompson, in particular, bear the brunt of this frustration, with the latter described in the media as a ‘soft touch’. The same cannot be said of Mr Thompson’s approach to tax, and in particular IR35 compliance, among contractors.
Big business tax avoidance is something contractors have strong opinions on. 95% of independent workers told Qdos last year they believe more action must be taken to make sure large firms face up to their tax responsibilities in the UK. 92% of independent workers also criticised the Government for perceiving the self-employed and small businesses as easy targets.
The move to award Mr Thompson with a knighthood has also proved unpopular among contractors who will be impacted by the 2019 Loan Charge, which applies retrospective taxation on loans individuals were, in many cases, mis-sold up to 20 years ago.
One individual, a campaigner against the incoming Loan Charge, expressed her disbelief, and Tweeted: ‘Jon Thompson’s award is an outrageous insult to every person who will be bankrupted thanks to his introduction of retrospective tax.’
While the HMRC chief was honoured for his three decades of commitment to public services, and not just his contribution to the tax office, contractors feel that his failures when focusing on IR35 should have been taken into consideration. One independent worker, a marketing consultant who asked to remain anonymous, expressed this view;
“The fact of the matter is, IR35 reform has been a shambles in the public sector, which doesn’t fill contractors with much confidence – if any – leading up to private sector changes. If I led a project this poorly, my reputation would be damaged and I’d have been let go by a client. Jon Thompson, on the other hand, has been knighted.”
In awarding Jon Thompson this honour, contractors believe HMRC’s performance in IR35 court cases has also been overlooked (the taxman has recorded just one success in ten this decade) and the true and damaging impact of public sector IR35 changes ignored.
Eyebrows were also raised at a number of other individuals on this year’s Honours list, with the vice-chancellor of Falmouth University, Anne Carlisle, receiving an OBE. She was recently criticised for the £300,000 salary she receives in her role at one of the UK’s smallest universities.
For contractors, however, it is the decision to award the chief of HMRC with such a prestigious honour that appears to be even more baffling.