December 20, 2011 / 12:56 AM / 9 years ago

MPs say taxman "too cosy" with companies

LONDON (Reuters) - MPs on Tuesday attacked “cosy” relations between the tax authorities and large companies, saying they could cost the country millions of pounds.

The inquiry by parliament’s Public Accounts Committee followed deals agreed between tax authority HMRC and U.S. investment bank Goldman Sachs and mobile group Vodafone.

“This report is a damning indictment of HMRC and the way its senior officials handle tax disputes with large corporations,” PAC chair Margaret Hodge said in a statement.

“There is more than 25 billion pounds outstanding in unresolved tax bills and it is essential that there should be proper accountability to Parliament for the settlements reached by HMRC,” she added.

“Having looked at the two cases in the public domain, we are concerned that many millions of pounds may be lost to the public purse.”

Hodge said Britons were concerned that big companies were getting an easier ride than small businesses or individual taxpayers.

“The Department’s working practices must be seen by the taxpaying public to be absolutely impartial. The impression being given at the moment is quite the opposite, of far too cosy a relationship between HMRC and large companies.”

HMRC disputed the 25 billion pound figure and rejected the main conclusions of the report, denying there were systemic failures in the management of tax disputes.

“The report is based on partial information, inaccurate opinion and some misunderstanding of facts,” an HMRC spokesman said in a statement.

“We agree that public confidence in our processes is important, and, as we have already informed the Public Accounts Committee, we propose to make further improvements to our governance and to increase transparency about our work with large business,” he added.

Spending watchdog the National Audit Committee is expected to carry out a supplementary review of larger tax settlements for the PAC.

The PAC report singled out HMRC head Dave Hartnett for criticism over his dealings with Goldman. Hartnett has announced that he plans to retire next year when he will be 61.

“In particular, his evidence to the Treasury Select Committee on his relationship with Goldman Sachs is less than clear given his evidence to us that he facilitated a settlement with the company over their tax dispute.”

Goldman Sachs lowered its tax bill by 10 million pounds in 2010 after a privately negotiated deal allowed it to avoid paying interest payments on 30 million pounds back taxes it owed, it emerged in October.

Scrutiny over Vodafone’s tax dealings sparked protests last year at its main Oxford Street store in London. It reached a settlement of 1.25 billion pounds in a dispute arising from an acquisition, a figure which some MPs on the committee said was far less than it could have been asked to pay.

Vodafone has described the sum it paid as a “full and final settlement” and said it had no unpaid tax bill in the UK.

Editing by Mark Potter

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