Last Autumn the Public Accounts Committee challenged whether HMRC was too cosy with large business and had settled enquiries too cheaply. The National Audit Office thus engaged former High Court judge Sir Andrew Park to review in detail five cases where the NAO had found HMRC had not complied fully with its own procedures in settling the cases. Two of the cases are public: Vodafone and Goldman Sachs.
The four corporate tax cases essentially covered transfer pricing and Controlled Foreign Companies issues [happy to explain what CFCs are if anyone wants]and ? in all cases ? Sir Andrew found that the settlements were reasonable (and one probably favourable to the Exchequer). HMRC had conducted thorough examinations of the issues and had taken legal advice where appropriate. The only real issue was that there hadn?t been the level of independent review that there should have been ? but that was because there were no other Commissioners with appropriate tax knowledge.
The fifth case concerned NIC. The NAO report makes it clear that there were quite a few procedural errors in that case ? and it?s probably fair to say that HMRC doesn?t come out especially well. However, there were six separate technical issues included in the Goldman Sachs settlement ? not just the NIC and interest on it. The overall agreement covered all six ? and in that context Sir Andrew considered the settlement was reasonable. After the settlement was reached, the matter was taken to the Programme Review Board, which initially refused to agree it since interest hadn?t been charged. Legal advice was then taken and the Board then agreed it was not in HMRC?s interests to reopen the matter. Indeed, Sir Andrew considered that HMRC couldn?t have reopened it, since the original agreement with the bank was legally binding.
Meanwhile, UKUncut have persuaded the High Court that they have an arguable case to challenge the legality of HMRC?s settlement in the Goldman Sachs case. The judicial review will be heard in October.