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MPs slam HMRC for “cosy” deals with corporates

A report by the Public Accounts Committee said the taxman must address “systemic issues”

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A committee of MPs has criticised HMRC for governance breaches in its tax negotiations with some companies and for treating large corporate "more favourable" than other taxpayers.

In a new report the Public Accounts Committee said that there were "systemic issues" at HM Revenue and Customs that had to be dealt with to avoid the same tax officials negotiating and approving tax settlements with corporates for outstanding tax payments.

"The department has left itself open to suspicion that its relationships with large companies are too cosy," the PAC report said.

The report singled out Dave Hartnett, permanent secretary for tax, for failing to handle tax negotiations with some big companies properly and with little public scrutiny.

"We have serious concerns about how the department handled some cases involving large settlements, where governance arrangements were bypassed or overlooked until it was too late. In some cases the same officials negotiated and approved the settlements, which is clearly unacceptable," the PAC report said.

It added: "There needs to be proper separation between the negotiation of tax settlements and the authorization of such settlements."

MPs said the Revenue's duty was to secure value for money but in one case because of governance failings a loss of up to £8 million in interest was made. The PAC also said there was evidence that "the total value of interest payable in respect of this particular settlement could be as high as £20 million".

Tax lawyers suggest that the report signals the end for similar deals being made with HMRC for other corporates in the future.

"This report has enormous implications for how HMRC deals with the largest companies. It is important that HMRC stops making deals behind closed doors without following a transparent process which is the same for all companies," Jonathan Levy, head of the tax disputes group at City law firm RPC, said.

"A fair and transparent system, in which all taxpayers, large and small, know where they stand and are treated equally, will promote certainty and confidence in the UK tax system," Levy, a former senior member of HMRC Solicitor's Office, added.


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