NAO report should allay taxpayer fears, say experts

THE NATIONAL AUDIT OFFICE’S two-tiered conclusions on HMRC’s tax settlements in five long-running disputes should be a source of comfort to taxpayers, according to experts.

The report found the Revenue had reached “reasonable” settlements in five so-called sweetheart deals, which included investment bank Goldman Sachs and telecoms giant Vodafone.

It also queried the process by which the deals were struck. It cited poor communication and the exclusion of specialist staff from meetings regarding the settlements as issues of particular concern.

The report compared the deals with how much the taxman could have expected to glean if it had engaged in litigation against the five parties. In each case, it was found the outcome for the Exchequer was good.

The report came just days after UK Uncut activists won the right to challenge the taxman over its deal with Goldman Sachs in the High Court. UK Uncut said the deal cost the public purse some £20m.

Chris Oates, head of tax controversy and dispute resolution at Ernst & Young, said the ruling should reassure taxpayers there was nothing sinister about the deals.

“This independent assessment gives comfort and greater certainty to taxpayers that agreed settlements will not be revisited,” he said.

“We also welcome the recognition that there are, in most tax cases, a range of ‘right answers’ and that collaborative resolution of disputes is a useful tool for settling long running and complex issues.”

Mike Truman, editor of Taxation, added he felt the NAO’s report into the matter was the most credible to date and noted it absolved tax commissioner Dave Hartnett of any wrongdoing in his role in the deals, after he had been roundly criticised in a report by the Public Accounts Committee.

He said: “While agreeing that there were governance issues to be addressed, the NAO report is in marked contrast to the report of the Public Accounts Committee on HMRC’s 2010/11 activities, which personally criticised Hartnett for getting too ‘cosy’ with the companies HMRC was pursuing.

“Overall, it is the Public Accounts Committee which comes out of this looking as if they were pursuing a personal vendetta against Hartnett, and lacking in the expertise necessary to understand the issues concerned.”

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