Taxman ‘helped big business avoid bills and cost public purse millions’

Published on Tuesday 20 December 2011 00:00

TAX chiefs face a mauling by MPs today over accusations they bent rules to do favours for big firms at a cost of millions of pounds to the taxpayer then hid the details from a watchdog.

Calling for senior officials to face punishment for a series of costly errors and failures, the public accounts committee warned that procedures should be tightened.

Its report called for safeguards to be put in place to avoid the impression that HM Revenue & Customs (HMRC) enjoyed an “unduly cosy” relationship with major companies.

And the MPs demanded explanations of why officials wrongly claimed that they could not discuss deals with the committee and gave “inconsistent and potentially misleading” answers.

The report represents the conclusions of a fiery public inquiry by the committee which at one point saw Dave Hartnett, permanent secretary for tax – the head of HMRC – accused by the chairwoman of lying.

The National Audit Office has now appointed a former judge to investigate.

Mr Hartnett, who is to retire next summer, has admitted that an error led him to sign off on one tax avoidance dispute.

Banking giant Goldman Sachs was allowed to skip a multi-million-pound interest bill on unpaid tax on bonuses after Mr Hartnett said he was wrongly advised there was a “legal impediment” to collecting it.

The potential cost to the taxpayer has officially been put at £8 million, but the committee was given evidence from a whistleblower that the sum could be as high as £20m.

In their report, the MPs expressed astonishment that HMRC “chose to depart from normal governance procedures” by allowing the same senior officials to both negotiate and approve such deals.

Worse, it said, the Goldman deal was done “without legal advice” or an official note being taken of the meeting, with officials relying on the firm’s records.

And no good reason had been given for why the deal was not halted when the error was found, the MPs said.

They also expressed concern that a whistleblower who exposed the case may have been harassed.

Noting that Mr Hartnett alone had enjoyed 107 dinners and lunches with companies, tax lawyers and advisers over two years, the MPs raised concerns that relations could seem “unduly cosy”.

While such contact was undoubtedly necessary to the role, their report concluded, HMRC paid insufficient attention to whether there could appear to be conflicts of interest.

It was unfair that big operations were given discounts and more leeway in deadlines for repayment than were available to smaller outfits and individuals, the report said.

Committee chairwoman, Labour MP Margaret Hodge, said: “This report is a damning indictment of HMRC and the way its senior officials handle tax disputes with large corporations.”

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Deleted

Tuesday, December 20, 2011 at 12:19 PM

Shouldn't the Queen be imprisoned for this?

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10

KINGFISHER1

Tuesday, December 20, 2011 at 11:31 AM

NOT PLEASED DRAGON. NOT PLEASED AT ALL!!! I note 8 is complaining about moderation. HMRC and the Goverment in particular should know what has to be done to put in place a simplified, effective and fair tax system What is NOT accepptable is one whic is manifestly unfair and targetted at the poor. This is not new and is part of teh corrupt banking and insurance system While apprecaiting there may be practical difficulties for Government, the position can easily be amended with such as higher VAT and higher thresholds for Income Tax,as for example exemption from tax to those earning less than £25K. If the Revenue is not able to accomodate such exemption, then manifestly its Taxation system is SERIOUSLY WRONG and almost certainly CORRUPT. Likewise, if its enforcement procedures are Harsh and Oppressive, which appears to be self evident, then the position is NOT SATISFACTORY AT FORMAL. I am well aware that , AT FORMAL,may not be corectly understood, but I have CLARIFIED ON POINT. Having done that, I am entitled to expect, that in advanced economies, as in Westerns Europe, they have in place fair taxation systems and do not indulge in corrupt Political and Judicial practices;including specifically with EXTRADITION!!!

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9

Yosuf Bin Telt

Tuesday, December 20, 2011 at 11:15 AM

There's a very interesting story behind all this. What a pity this paper has chosen not to cover it. Mind you, that would probably require some journalism. #8 Ron Well said as always. Sooner or later, some administration will have to bite the bullet over land tax. It makes perfect sense, and there is no valid argument against it. The SNP have been astonishingly silent on this issue.

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8

Ron Greer

Tuesday, December 20, 2011 at 10:16 AM

#7 At #7 I posted thoughts on replacing all punitive taxes on labour, enterpris and bricks and mortar property ,by a 100% collection of 100% societally created land rental values, using no foul or personally derogatory language. This would create a source of unavoidable public revenue that could not be avoided by 'tax avoidance consultants' or nondoms and would encourage and reward talent , enterprise and plain simple hard work. I fail to understand why the moderator refused it, unless it was because I was undermining the whole corrupt basis of our current system of land monopoly capitalism.

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7

Ron Greer

Tuesday, December 20, 2011 at 10:09 AM

Pending Moderation

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6

John H

Tuesday, December 20, 2011 at 09:39 AM

Tott The man who knows everything about everything stated that this type of deal struck by HMRC is in the interest of public good. It is truly amazing how almost to a manwoman people in the financial sector seem to have a stance that tax avoidanceevasion are fair game. The ONLY people in this country who pay their proper tax are on PAYE.It is time the loopholes were closed for good . Why should they get a different status than what is the norm? Earn the money, pay the tax. As for having confidence in David Hartnett,s leadership shows to me that he is no more than a puppet who's strings are being pulled by the establishment and big to middle business's for their own greedy ends. He should be jailed.

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5

B K

Tuesday, December 20, 2011 at 08:28 AM

#1 Yes he has, and still is.

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4

Family guy

Tuesday, December 20, 2011 at 07:42 AM

Private Eye has been reporting this for months. There was no outcry by this paper, or other "Scottish" papers about it previously, so why now?

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3

marry

Tuesday, December 20, 2011 at 07:02 AM

Comment removed by moderator

2

abner doubleday

Tuesday, December 20, 2011 at 01:31 AM

What about the team at Ibrox? Could they not afford the brown envelopes and cosy lunches? Or were the freebies on offer unpalatable?

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1

erramacaroonbars

Tuesday, December 20, 2011 at 12:23 AM

Dave Hartnet has never been the head of HMRC.

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