HMRC response to PAC
Report - EMBARGOED UNTIL 00.01 on TUESDAY 20 DECEMBER 2011
HM Revenue
& Customs (HMRC) has today responded to the report of the
Public Accounts Committee into tax disputes. An HMRC spokesman said:
“HM Revenue & Customs rejects the conclusion of the
Public Accounts Committee 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. We agree that public confidence in our processes is
important, and as we have already informed the Public Accounts
Committee we propose to make further improvements to our
governance and to increase transparency about our work with large
business. We also welcome the further review that the National
Audit Office is to carry out as an opportunity to confirm this and
clear up the concerns about foregone millions.”
In response to the specific criticisms, the spokesman said:
1. “specific and systemic failures”
“We acknowledge that a mistake was made in one settlement and
explained how this arose. We reject the suggestion that this is
evidence of systemic failure. This assertion, based on untested,
leaked information, is without foundation. ”
2. “more than £25 billion outstanding in unresolved tax bills”
“We explained to the Committee and again in a letter to the
Committee Chair in November that this figure is a ballpark
estimate of maximum potential tax liabilities, before a full
investigation of the specific facts has taken place, and before
applying any reliefs or allowances. It is not actual tax either
owed or unpaid. In many cases, when HMRC has looked at the full
facts it becomes clear that there is no further liability at all.
Tax under consideration is an administrative tool to help us to
focus our resources on cases where potential tax liabilities
appear to be greatest. It is not tax owed.”
3. “many millions of pounds may be lost to the public purse”
“HMRC’s job is to bring in the tax that’s owed and that’s what
we’re doing. We collected a record £468 billion in taxes last
year, including more than £13 billion extra from our compliance
work. We drew the NAO’s attention to an error in a single case
which they then estimated to be between £5 and £8 million.
4. “a mistake led to a potential £20 million of interest on a
tax liability not being collected”
“We do not agree this figure. We drew the attention of the
Comptroller and Auditor General to an error, which he then
estimated as between £5 million and £8 million.
5. “it is extremely disappointing that senior HMRC officials were
not prepared to cooperate with our inquiry in a spirit of
openness. We accept that 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…It is absurd that we had
to rely on the media and the actions of a whistleblower to find
out about the details of individual settlements.”
“Senior HMRC officials sought to be co-operative by providing as
much information as possible within the legal constraints of
taxpayer confidentiality under which they work. Taxpayer
confidentiality is a legal requirement, fundamental to tax
administration in the UK and across the world. Parliamentary
scrutiny is delivered via the NAO to whom HMRC provide unfettered
access to all their papers.”
6. “Parliament and the public have legitimate concerns that large
companies are being treated more favourably than ordinary
taxpayers… “
“HMRC treats all taxpayers even-handedly, supporting the majority
who comply with their duty to pay their taxes, and cracking down
hard on evaders, avoiders and fraudsters.
“It is wrong to suggest that HMRC officials are too lenient on
large businesses. Large businesses pay around 60 per cent of total
UK tax receipts, and account for more than half of the £13.9
billion additional compliance revenues that we brought in last
year.
“Large business tax settlements are a vital part of how HMRC
secures tax revenues for the country and without them Britain’s
public finances would be seriously damaged. HMRC's large
business strategy is now being adopted by other tax
administrations around the world.
7. “in several cases, HMRC chose to depart from its normal
governance procedures. It is extraordinary that the same officials
who negotiated deals also approved them.”
“We have already informed the Committee of the action we have
taken to ensure that in any case where an HMRC Commissioner has
been involved in negotiations, the settlement decision is made
under a ‘dual key’ approach by two different Commissioners. We
have also written to the Committee with proposals to further
strengthen our internal governance. These further changes will be
agreed with our new Chief Executive in the New Year.
NAT 106/11
Issued by HM Revenue & Customs Press Office Press
enquiries only please contact:
Contacts:
HM Revenue & Customs Press Office
HMRC-Press-office.NDSmanagement@hmrc.gsi.gov.uk
Paul Franklin
Phone: 020 7147 2321
paul.franklin1@hmrc.gsi.gov.uk
HMRC Out of Hours
Phone: 07860 359544
NDS.HMRC@coi.gsi.gov.uk