Information vacuum will not help the taxman

by Jaimie Kaffash

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21 Dec 2011

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YESTERDAY'S Public Accounts Committee report into HMRC's big business settlement strategy has been widely regarded as a damning indictment. While this is true, there are very few conclusions to be made and it is clear that this is a few shots in a far longer war between the MPs and HMRC.

There have been headlines of an unpaid £25bn tax bill by big business, with Vodafone underpaying by £4.75bn and Goldman Sachs underpaying by £20m. While understandable, these headlines are not helpful, and the MPs stop short of making such accusations.

The most consistent criticism throughout the report is HMRC's lack of willing to offer more information. Indeed, after reporting the numbers, the report says: "Our understanding of how [the Goldman Sachs] case was settled is inhibited by the imprecise, inconsistent and potentially misleading answers given to us by senior department officials, including the permanent secretary for tax [Dave Hartnett]."

The lack of information means that the conclusions of whether the taxman has been settling for less than it should with big business are not as strong as they could be. With this vacuum, it is not unfair for the MPs to suggest how much could be lost, but they are only suggestions.

Another accusation from the MPs is that HMRC is taking confidentiality too far. The pressure on the department might make senior officials less inclined to go beyond the call of duty to keep details of agreements private.

The forthcoming judicial review by UK Uncut, if it takes place, will clarify how much the taxman is able to disclose about confidential agreements. If HMRC does not think it has much to hide in the way it settles disputes with big business, then it might well want to lose the judicial review.

Otherwise, this dispute between HMRC and the PAC (and this is definitely a dispute) will continue to run. And the drip feed of information through whistleblowers and sterling work from Private Eye will be far harder to counter than if it were released through legislative channels.

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