The Commons Public Accounts Committee this week accused HMRC managers of concealing “sweetheart” corporate tax deals from public scrutiny and breaking its own governance processes, resulting in “substantial amounts” of tax being lost to the Exchequer.
The committee's report into HMRC tax disputes accused HMRC of having a "cosy relationship" with big business, allowing them to settle tax disputes for less than the full amount due over extended timescales, while small businesses without the assistance of professional advice are denied equivalent treatment.
The basic findings of the PAC report are damning:
- The department’s refusal to disclose taxpayer information prevents proper scrutiny of the process for reaching tax settlements with large companies.
- Evidence from senior officials failed to give the committee any confidence in the way large settlements are reached.
- HMRC departmed from normal governance procedures in several cases, by allowing Commissioners to approve settlements they themselves negotiated.
- Governance procedures have lacked the independence and transparency needed
- to provide sufficient assurance to Parliament.
- Failure to comply with its own processes resulted in a substantial amount of money being lost to the Exchequer - at least £8m in lost interest on one case, and potentially more according to a whistleblower’s evidence.
- Top HMRC officials have not taken personal responsibility for serious errors.
- The department has left itself open to suspicion that its relationships with large companies are too cosy.
- HMRC is not being even handed in its treatment of taxpayers.
Margaret Hodge, chair of the Committee of Public Accounts, said: “This report is a damning indictment of HMRC and the way its senior officials handle tax disputes with large corporations. We uncovered both specific and systemic failures which must be addressed.”