NAO: Taxman in control of large business disputes

THE TAXMAN has sound governance in place to manage tax disputes with large companies, the National Audit Office has found.

In its review of HMRC across 2010-11, the NAO said the taxman was investigating more than 2,700 issues with the largest companies with a potential £25.5bn at stake.

HMRC’s processes for settling tax disputes with large companies were found adequate to establish a sound position on the tax due, and it had “sound governance arrangement” for settling tax disputes, complying with these in the “vast majority” of cases.

However, in three of the largest settlements examined by the NAO, one or both of HMRC’s commissioners signed off the settlement having also participated in the negotiations. “This reduced the demonstrable assurance to taxpayers and Parliament that the settlements reached were appropriate,” stated the NAO.

“To give confidence to external and internal stakeholders, however, 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,” said NAO head Amyas Morse.

Significant progress had been made by the Taxman in stabilising its administration of PAYE and it expects to be clear of legacy issues by the end of 2012.

The Taxman’s receipts for the period were £468.9bn, 7.6% greater than the previous year. Around £13bn of the increase in revenues came from the VAT rise. A £5bn increase in income tax and NI receipts was recorded, while corporation tax recipes climbed £8bn.