HMRC criticised for 'cosy' deals by committee of MPs
Chief tax collector Dave Hartnett announced earlier this month that he would retire next summer
A committee of MPs has criticised "cosy" deals between HM Revenue & Customs (HMRC) and big businesses over how they settle their tax bills.
The Public Accounts Committee said it had "serious concerns" about how some large settlements were reached.
The MPs believe there are £25bn of outstanding tax issues with big companies and wants HMRC to be more open in its dealing with large firms.
HM Revenue & Customs said the MPs had misunderstood the facts.
The committee singled out Dave Hartnett, permanent secretary for tax, for failing to handle tax negotiations with some big companies properly.
A spokesman for HMRC hit back, saying the MPs were simply wrong to call Mr Hartnett's honesty into question.
"The report is based on partial information, inaccurate opinion and some misunderstanding of facts," the spokesman said.
"The idea Dave Hartnett cuts a large tax bill in return for a glass of wine and a cheese sandwich is just plain nonsense.
"If he was interested in feathering his nest he would have accepted one of the many highly lucrative offers of work he regularly receives from the private sector," the spokesman added.
Stonewalling
The report by the committee contains some of the most severe criticism of a civil servant yet published.
The MPs accuse Dave Hartnett of mishandling tax negotiations with some big companies such as Goldman Sachs, letting it off millions of pounds in interest on its tax bill.
He had also, the MPs said, tried to stonewall their questions when they quizzed him at committee hearings during October and November this year.
The MPs say he:
- authorised a large tax settlement whose negotiation he had been involved in, breaching HMRC's internal rules
- had given "imprecise, inconsistent and potentially misleading answers" to MPs
- had relationships with big companies that were "too cosy", resulting in the appearance they received "preferential treatment"
- had used a bogus excuse of observing taxpayer confidentiality to avoid explaining the tax deals he had been involved in.
Margaret Hodge MP, chair of the Public Accounts Committee, said: "This report is a damning indictment of HMRC and the way its senior officials handle tax disputes with large corporations."
"Having looked at the two cases in the public domain, we are concerned that many millions of pounds may be lost to the public purse," she added.
An HMRC spokesman said Mr Hartnett had answered questions strictly in line with the advice of the tax department's lawyers, which legally restricted how much he could reveal about individual tax cases.
In early December Mr Hartnett announced he would be retiring in the summer of 2012.
UK Uncut
The tax campaign group UK Uncut is taking HMRC to the High Court on Thursday, seeking a judicial review to try to get them to reclaim millions of pounds in tax from Goldman Sachs.
Tim Street from UK Uncut Legal Action told the BBC it was in the public interest and that: "this is the only way to recoup the tax."
He claimed the tax agency's ability to investigate tax avoidance in future could diminish.
"HMRC is going to have a decrease in the numbers of employees and money they receive," he said.
Mr Street said that clamping down on tax avoidance was an alternative to a strategy of public sector cuts.
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