Britain’s tax authorities failed to follow the rules properly when settling large tax bills with major companies, the government spending watchdog said.
Her Majesty’s Revenue & Customs “overlooked governance arrangements,” excluded specialized staff from final settlement negotiations and communicated poorly, the National Audit Office said in a report published in London today. Even so, it said the amount of money raised in five unnamed disputes it examined was “reasonable.”
“With billions of pounds of tax at stake it is extremely worrying that the department failed to involve its own specialists in the final negotiations and follow its own rules by settling for less than it could have won in litigation,” Margaret Hodge, the opposition Labour Party lawmaker who heads Parliament’s Public Accounts Committee, said in an e-mailed statement. “These deals have sent a message that it’s one rule for big business and another rule for everyone else.”
A judge in London ruled yesterday that a deal between the tax agency and Goldman Sachs Group Inc. that saved the bank as much as 20 million pounds ($31 million) should be reviewed by a U.K. court. UK Uncut, a group that opposes reductions in government spending, had questioned the legality of HMRC’s decision to allow Goldman to forgo paying interest on money owed from a plan to avoid contributions on employee bonuses dating from the 1990s.
The government has pledged to crack down on what it sees as abusive tax-avoidance schemes, including a Barclays Plc plan that denied the Treasury more than 500 million pounds. Barclays Chief Executive Officer Robert Diamond criticized the government’s handling of the dispute in May, calling it “unwarranted.”