New IRD boss backs French advisers

Stints at tax authorities in three countries stood Inland Revenue's newly minted commissioner in good stead as she batted off an attack by the Green and Labour parties over consultant Capgemini.

In a select committee hearing yesterday IRD Commissioner Naomi Ferguson stuck by the department's choice of the French firm after Green Party co-leader Russel Norman and Labour's Clayton Cosgrove raised the firm's alleged tax avoidance in the UK.

A recent report in the Sunday Times claimed Capgemini paid less that 1 per cent tax on revenue earned in the UK while performing consultancy services for the British government.

"With the use of consultants, do you think they need to be good corporate citizens? For example, is it important that they pay tax?" asked Norman.

Capgemini was last year appointed by the New Zealand tax department to assist its business transformation process, which includes a $1.5 billion overhaul of the IRD's ageing technology infrastructure.

This is the second time this year the Greens have targeted the IRD's use of contractors, having in December discovered under the Official Information Act that the tax authority paid $10.6 million to Capgemini's Australian business over a 10-month period.

Ferguson was untroubled by the line of questioning, stressing "we are concerned with what our suppliers do in New Zealand.

"They are taxed on revenues and profits that they make in the country," she said. "How they operate internationally is not something I am privy to."

Attempts by National's Maggie Barry and former Accident Compensation Corporation minister Nick Smith to steer the discussion to other areas of the IRD's remit were thwarted by Cosgrove, who returned to Norman's line of questioning through numerous points of order.

The two gained little traction, with Ferguson sticking to a recitation of official IRD policy.

Ferguson's ease before policymakers is probably explained by her familiarity with the IRD, having previous served as deputy commissioner between 2003 and 2006.

She also worked as head of business customers and strategy at Her Majesty's Revenue and Customs, and served as regional director of Inland Revenue for Northern Ireland.