MPs label taxman biased to big business in 'systemic failure' of duty

The Public Accounts Committee has issued a damning report on the relationship between Her Majesty’s Revenue and Customs (HMRC) and big business.

It comes after allegations of a "sweetheart deal" between the Revenue and Goldman Sachs over its alleged £10m unpaid tax bill, the disclosure of which has led to a whistleblower being disciplined.

Margaret Hodge, chair of the accounts committee, said there is a "far too cosy relationship between HMRC and large companies". The report said big businesses are given preferential treatment over individuals and small firms.

MPs said it was "completely unacceptable" that HMRC officials negotiated and approved settlements with big businesses unaccountably.

They also claimed governance arrangements at HMRC were bypassed or overlooked, resulting in one case where £8m in interest on unpaid tax bill was lost to the Exchequer.

MPs said when mistakes were made there was little evidence of personal accountability.

Margaret Hodge, chair of the committee, said the report uncovered "both specific and systemic failures" at HMRC.

Hodge accused top HMRC staff of deliberately withholding information from Parliament in an attempt to cover up backroom deals.

"It is extremely disappointing that senior HMRC officials were not prepared to cooperate with our inquiry," she said.

"We accept there is a need for confidentiality to protect individual taxpayers, but this must not be used as a cloak to protect the department from scrutiny."

The report looked closely at two major cases which it said have been in the public domain but did not specify which companies they concerned.

However, the report did refer to HMRC's permanent secretary for tax Dave Harnett, pictured, and his handling of the Goldman Sachs dispute.

The report said Harnett's evidence to the Treasury Select Committee (TSC) about the Goldman dispute was "imprecise, inconsistent and potentially misleading" and said his relationship with Goldman Sachs is "less than clear".

The committee recommended HMRC separates the negotiation and authorisation of tax settlements and improve accountability of the department to Parliament.

HMRC has appointed two new commissioners, and plans to introduce a new assessor to independently review large settlements before they are approved.

However HMRC has rejected the committee's view that it is suffering from systemic failure.

An HMRC spokesperson said: "HMRC rejects the conclusion that there are systemic failures in the management of tax disputes. The report is based on partial information, inaccurate opinion and some misunderstanding of facts.

"HMRC's internal processes are robust and this was confirmed by a recent review by the National Audit Office of large business settlements."