A forensic investigation by the NAO into 2,700 disputed deals – totalling £25.5 billion in tax revenue due to be paid by some of the largest companies in the United Kingdom – has revealed that the top three firms paying the most tax have been given an easy ride by the Revenue.
Under deals reached with the bosses of the firms the same Revenue negotiator who dealt with the company then approved the arrangement – without getting it independently checked by a senior Revenue Commissioner.
As a result the final tax due to HM Revenue and Customs was agreed without being scrutinised by someone who could challenge the deal in the interest of taxpayers.
The investigation praised HMRC for setting up tough arrangements to combat potential tax avoidance –including referring the most contentious cases to a High Risks Corporates Programme Board.
The problem was four of the largest tax arrangements were agreed without any reference to the board.
The NAO report says: “In four of the largest settlements we examined, the department used specific governance arrangements, which involved reducing the size of the team dealing with the case and the settlement being signed off by Commissioners without a prior reference to the Programme Board.
In three of these cases, one or both of the Commissioners signing off the settlement also participated in the settlement negotiations.”
The report is also concerned about two other significant cases – one deal was reached by negotiators without realising they should have sent it to the board and another went through without consulting the whole board because some of its members were left off an email list.
Amyas Morse said: “To give confidence to external and internal stakeholders HMRC needs to ensure that, for all major tax disputes, there is a demonstrable separation between those responsible for negotiating the settlements and those responsible for approving them.”
A spokesman for the NAO could not name the companies – pointing out it was a criminal offence to reveal details of companies’ tax returns under financial legislation.
