Wed, 7 Dec 2011

HMRC may end up in the dock following whistleblower’s allegations over tax deals

HM Revenue & Customs (HMRC) may have acted illegally by controversially allowing Goldman Sachs and Vodafone off millions of pounds in tax.

The Guardian reports that the Public Accounts Committee (PAC) hopes to engage a QC to analyse a whistleblower’s allegations into the case.

It is believed whoever is appointed could have powers to examine the private accounts of Goldman Sachs and Vodafone to establish whether senior Revenue officials wrongly wrote off millions in outstanding tax bills.

The whistleblower’s allegations centre around two cases.

In the case of Vodafone it is claimed an agreement to waive up to £7 billion in tax may have been outside the powers of HMRC.

Vodafone did agree to pay £1.25 billion in tax arrears last year but the interest was waived. This has been called a “sweetheart deal” following research that uncovered the boss of HMRC, Dave Hartnett (pictured), was also the most ‘wined and dined’ civil servant.

In another case Goldman Sachs struck a deal with the Revenue that saved it around £10 million on a £30 million bill from a failed tax avoidance scheme on bankers’ bonuses. HMRC insists there was a ‘legal impediment’ to pursuing this case.

The whistleblower claims this deal was actually worth £20 million.

Knowledge of deals

Margaret Hodge, PAC chair, which has been quizzing Hartnett in recent weeks, is reported as saying she received the allegations from someone with an apparent detailed knowledge of the deals.

She told The Guardian: “The main allegation is that senior officials at Revenue and Customs have acted ultra vires [beyond their powers] and we are duty bound to take that seriously.”

HMRC has repeatedly denied carrying out “sweetheart deals” with large firms and says it focuses on corporate businesses that “abuse the rules” – resulting in an additional £9 billion being brought in for UK taxpayers last year.

See also:

• HMRC’s implementation of new computer system falls short ahead of RTI
• HMRC chairman who was supposed to represent ordinary taxpayers steps down
• Dave Hartnett will retire next summer