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Tax Tip

HM Revenue and Customs (HMRC) enjoyed an "unduly cosy" relationship with major companies. 21/12/11

So says the Public Accounts Committee (PAC) as MPs demanded explanations of why officials wrongly claimed they could not discuss deals with the committee and gave "imprecise, inconsistent and potentially misleading" answers.

The committee of MPs said they believed there was £25bn of outstanding tax potentially owed by big companies and wanted the Revenue to be more open about its dealing with large firms.

Banking giant Goldman Sachs was allowed to skip a multi-million pound interest bill on unpaid tax on bonuses after Mr Hartnett was wrongly advised there was a "legal impediment" to collecting it. The potential cost to the taxpayer is officially put at £8 million but the committee was given evidence from a whistleblower that the sum could be as high as £20 million.

HMRC flatly rejected the committee's conclusion, and their spokesman denied the error made in the Goldman Sachs case was evidence of a wider, systemic failure and rejected the claim that the loss to the taxpayer could be as high as £20 million.
 

The report by the committee contains some of the most severe criticism of a civil servant yet published. They were especially critical of Dave Hartnett's role as HMRC's chief tax collector
"The absence of full transparency about his relations with companies risks the perception that he acted improperly or exercised poor judgement," the MPs said.
 

Margaret Hodge MP, chair of the Public Accounts Committee, told the BBC that:
"Big companies have very expensive advisers, consultants and lawyers. HMRC, on their own admittance, has very few people who have deep knowledge of tax affairs," she said.
 

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.
 

If you have any questions or concerns about Tax Planning and its implications, contact ABDS Tax team.

ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900  E-mail: abds@netaccountants.net
 

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