The Parliamentary Accounts Committee has been investigating the work of H M Revenue & Customs. It has been assisted in its work by HMRC lawyer Osita Mba who decided to tell them the truth about what was happening in his department and the legality of certain claims made by its management. Their report is due tomorrow, and is likely to be highly significant. As the Telegraph reported yesterday:
The National Audit Office (NAO) is poised to investigate “sweetheart” corporate tax deals agreed by HM Revenue and Customs that are alleged to have cut companies' bills by billions of pounds. It is thought the NAO could examine up to 10 tax deals involving large corporates. Its investigation, which will be led by a judge, will follow this week's highly critical report from the Public Accounts Committee (PAC) into agreements struck between HMRC and companies to settle tax disputes.
Tuesday's report centres on agreements made by Dave Hartnett, HMRC's permanent secretary for tax, with Goldman Sachs and Vodafone — though PAC hearings found two undisclosed companies had also struck similar settlements. Owing to a “mistake” admitted by HMRC, Goldman ended up paying at least £10m less tax than was due on bonus payments. Vodafone settled a long-running dispute for £1.25bn but the PAC heard allegations that the bill should have been £6bn or more.
It's going to be a fun report. But let's also be clear what they are calling for: they're saying we need a tax authority run by a tax authority that believes in tax, the rule of law and the right of the state to recover what's due to it. The sort of tax authority a Courageous State would run.
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hear hear. interestingly, Jackey Ashley’s advice to Ed Milliband includes “getting out of … a tax system which lures rich, tax-allergic exiles here for no benefit.” But is he, or more precisely his party, ready for a Courageous State? Richard, I reckon it’s time we give the Greens more credit for what they do.
by the way, I wouldn’t place much faith on the NAO. According to the Guardian’s story, they were ‘investigating’ the Vodafone deal when Mr Mba reported the Goldman Sachs to them but they kicked it into the long grass and gave HMRC’s settlements a clean bill of health in their report published in July, only for Mr Mba to escalate matters to the PAC, which has now forced the NAO to reopen their ‘investigation’. why didn’t the NAO do it in properly in the first place, and why didn’t they do it when Mr Mba reported it to them? the NAO have questions to them and I for one, don’t trust them. besides, their ‘investigation’ will not have the power to declare any settlement illegal such that any tax due to the Exchequer can be recovered. only a judicial review can do this, and i gather that UK Uncut Legal Action will make a ‘big’ announcement on their imminent judicial review of the Goldman’s settlement this week. a judicial review of the multi-billion pounds Vodafone settlement will be in order.
Perhaps if there was a proper sense of RESPONSIBILITY within HMRC, whereby errors were not treated as “learning points” as stated by Mr. Hartnett to the PAC, individuals would be careful and review propsed actions? That could also avoid the current problem with the incorrect issue of Penalty Notices for Tax Returns which are not due to be filed until 31/01/2012. The Computer is only doing waht it was told, so who told it and why are they still in employment?