Following concerns by the Public Accounts Committee about HMRC's handling of the multi-million pound disputes with the heavy hitters of Goldman Sachs and Vodafone, the National Audit Office (NAO) undertook its own review.
Sir Andrew Park examined five cases in which deals were struck and deemed all five were reasonable under the circumstances and that at least one may have better than reasonable. This will be good news to Dave Hartnett, the exiting permanent secretary for tax, who was personally involved in four of the so called 'sweetheart' tax deals where he either agreed the settlements or was present at meetings when settlements were agreed upon.
In defence of HMRC, the NAO pointed out that the settlements were complex and that there was no absolute answer as to what constituted the correct tax liability. In each case, there was a number of justifiable approaches the Revenue could have adopted. Issues such as transfer pricing and controlled foreign company rules give rise to complex issues that can spawn differing interpretations and outcomes. These situations are in direct contrast to small businesses and individual taxpayers, where there is less scope for alternative interpretations of the legislation.
HMRC did not get away completely unscathed, however, as it was criticised in several other areas.
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