HMRC governance reform 'doesn't go far enough', says PAC member
Proposals for independent oversight of large tax settlements is 'step in right direction', says MP
By Jaimie Kaffash | CFO UK | Published 16:31, 28 February 12
HM Revenue & Customs has not gone far enough in reforming its structure for large corporate tax settlements, a prominent MP told CFO World on Tuesday.
Richard Bacon (pictured) – the Public Accounts Committee member who was a driving force behind the enquiry into the taxman's deal with Goldman Sachs – questioned whether HMRC's proposal for a new "assurance commissioner" would reassure parliament and the public over future tax deals made with corporates.
Under the new set-up announced on Monday, an "assurance commissioner" would scrutinise any future settlements and sign off - together with two other HMRC commissioners as part of a three-man panel - any cases where the tax under consideration is in excess of £100 million.
"I think the idea of having a tax commissioner ... whose chief job is to scrutinise the work of others is a good idea. It was something I suggested to HMRC," he said.
"Whether this step is far enough, only time will tell," Bacon added.
Bacon suggested a better set-up would be something akin to that of corporate boards with executive and non-executive directors.
"I would prefer a situation where we have seven tax commissioners, four of whom did the work and three of whom reviewed it – the equivalent of non-executive directors. Whether one assurance commissioner is sufficient, I think the jury is out."
Currently, two of the UK's only six tax commissioners have robust tax experience, one of whom is permanent secretary for tax Dave Hartnett, who is retiring in the summer.
"It is a given there should be more commissioners with tax experience. Two out of six is not very impressive," Bacon said.
HMRC's corporate governance structure had to be reformed, he added.
"What became obvious to us with our exchanges with HMRC was that ... it was unable to tell its own board details of large settlements," Bacon said.
The PAC held an inquest into a deal between the taxpayer and Goldman Sachs over unpaid National Insurance contributions. It was estimated that HMRC missed out on up to £20 million through an error, but the National Audit Office put this figure at £8 million.
The committee produced a damning report about HMRC's "cosy" deals with corporates last December.
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