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Comment: MPs accuse HMRC of soft deals with corporate taxpayers
The Public Accounts Committee published its report today. It criticises HMRC and some of its most prominent officials for being too close to some large corporate tax payers and potentially losing the public purse millions of pounds in revenues a result of cosy settlements with them. The former High Court judge, Sir Andrew Park, is being called in by the National Audit Office to examine some of the settlements. The pressure group, UK Uncut, is seeking judicial review of some of the settlements.
The chances of a successful challenge to settlements that have already been agreed between HMRC and taxpayers must be pretty remote. But the array of challenges to HMRC's current ways of working raises some difficult questions.
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There will often be disputes with taxpayers about the application of the tax law. HMRC has to be able to make sensible decisions about the circumstances in which it is worthwhile to pursue a case or accept a settlement. Will the current furore affect HMRC's approach?
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What will be the effect on the current Litigation and Settlement Strategy? Those with long memories will recall the strategy published in 2007, under which HMRC's stated objective was to insist on 100% recovery of tax liabilities where it was confident of its case. This hard line strategy was widely regarded as unsuccessful and had to be "refreshed" in favour of a more collaborative approach earlier this year. Will the increased scrutiny force HMRC to reverse a change in approach which has been broadly welcomed by taxpayers and their representatives.
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Where does this leave HMRC's attempts to encourage corporate taxpayers to engage in more open transparent relationships with HMRC?
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20 December 2011
Author: Ashley Greenbank
