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NAO criticises HMRC for "cosy" relations with big business


The NAO report released on Thursday echoes a report by a committee of influential MPs

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The National Audit Office has slammed the taxman for procedural errors in five large tax settlements that may have allowed Goldman Sachs and Vodafone among others to avoid paying millions in tax.

The public spending watchdog criticised the tax authorities, echoing earlier criticism of the deal from a parliamentary committee which accused HMRC of being "too cosy" with large companies.

Last December a committee of MPs chided HMRC for governance breaches in its tax negotiations with some companies and for treating large corporate "more favourable" than other taxpayers.

On Wednesday, British activists against tax avoidance won court backing to challenge the Goldman settlement, which cut its 2010 British tax bill by an estimated £10 million.

Activists protested outside Vodafone's main Oxford Street store in London in 2010 when its tax deal became public.

While the NAO said the settlements were reasonable, insofar as HMRC may have received less if it litigated and lost, the watchdog found procedural errors in how the tax collector cut the deals.

HMRC did not always seek legal advice before agreeing settlements, refer settlements for independent review, as was standard procedure, while staff did not keep notes of all meetings at which settlement terms were agreed.

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