MPs accuse taxman of bending rules to favour big firms

Tax chiefs are facing accusations from a committee of MPs of bending rules to do favours for big firms at a cost of millions to the taxpayer then hiding the details from a watchdog.

Calling for senior officials to face punishment for a series of costly errors and failures, the public accounts committee warned millions more were at risk unless procedures were tightened.

Its report published today called for safeguards be put in place to avoid the impression that HM Revenue and Customs (HMRC) enjoyed an 'unduly cosy' relationship with major companies.

And the MPs demanded explanations of why officials wrongly claimed they could not discuss deals with the committee and gave 'imprecise, inconsistent and potentially misleading' answers.

The report represents the conclusions of a fiery public inquiry by the influential committee, that at one point saw the country's top tax official Dave Hartnett accused by the chair of lying.

The National Audit Office has now appointed a former judge to investigate.

Mr Hartnett, who it was recently announced will retire as HMRC Permanent Secretary for Tax in the summer, has admitted an error led him to sign off on one tax avoidance dispute.

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Banking giant Goldman Sachs was allowed to skip a multi-million pound interest bill on unpaid tax on bonuses after Mr Hartnett was wrongly advised there was a 'legal impediment' to collecting it.

The potential cost to the taxpayer is officially put at �8m but the committee was given evidence from a whistleblower that the sum could be as high as �20m.

South Norfolk MP Richard Bacon, a member of the committee, said: 'HM Revenue & Customs has succeeded in creating the impression that it takes a softer approach to large and powerful firms while being tougher on small businesses. Whether accurate or not, this notion is toxic for HMRC's relationship with the vast majority of taxpayers. If all taxpayers are to have confidence that they are being treated even-handedly, HMRC must ensure that its dealings with large corporations are not just beyond reproach, but seen to be beyond reproach. Everyone is equal before the law. The same rules and fair treatment must apply - and be seen to apply - to everyone'.