Tue, 20 Dec 2011

HMRC rebukes scathing PAC report

HM Revenue & Customs (HMRC) has rebuked a scathing Public Accounts Committee (PAC) report that criticises its handling of corporate tax recovery.

Margaret Hodge, chair of the PAC, said the relationship between HMRC and large firms was like “David and Goliath” due to a lack of “deep knowledge” at the Revenue on tax matters that large firms had specialists working on.

But the Revenue has hit back at the criticism. A spokesman said: “We don’t accept this. We have the technical skills underwritten by our litigation and settlement strategy to ensure that even the largest corporates meet their liabilities.

“We have delivered over £25 billion in additional corporate tax to the UK since 2005 by effectively policing the corporate tax rules.”

And disputing a figure, also of £25 billion, which the PAC says is the amount of outstanding tax bills, the Revenue said:

“We explained to the PAC 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.”

See also:

• HMRC’s computer systems shutdown over long weekend
• Employees working from home: HMRC to issue monthly rate for first time
• Small debts collected through PAYE