| LONDON, June 14
LONDON, June 14 The UK's public spending
watchdog has criticized the tax authorities for a series of
settlements that may have allowed companies including investment
bank Goldman Sachs and mobile phone operator Vodafone to avoid
paying millions of pounds in taxes.
A National Audit Office (NAO) report released on Thursday
highlighted procedural errors in five large tax settlements,
echoing earlier criticism of the deal from a parliamentary
committee which accused tax authority HMRC of being "too cosy"
with large companies.
Amid a government policy of austerity, public discontent is
rising at rich individuals and big corporations incurring tax
rates well below those of average taxpayers' or the headline
corporation tax rate.
On Wednesday, British activists against tax avoidance won
court backing to challenge the Goldman settlement, which cut its
2010 British tax bill by an estimated 10 million pounds ($15.6
Activists protested outside Vodafone's main Oxford Street
store in London in 2010 when its tax deal became public.
While the NAO said the settlements were reasonable, insofar
as HMRC may have received less if it litigated and lost, the
watchdog found procedural errors in how the tax collector cut
HMRC did not always seek legal advice before agreeing
settlements, refer settlements for independent review, as was
standard procedure, while staff did not keep notes of all
meetings at which settlement terms were agreed.
"The findings from the review of these five settlements
confirm our concerns over the governance arrangements operated
in these cases," the NAO said.
Member of Parliament Margaret Hodge, head of the Public
Accounts Committee, which probed the deals last year said the
report showed how HMRC needed to clean up its relations with big
"This report confirms my Committee's concerns about the
uncontrolled way that HMRC has been doing secret deals with
large companies ....These deals have sent a message that it's
one rule for big business and another rule for everyone else,"
The tax authority has "acknowledged that its governance
processes need strengthening and is introducing new
arrangements," the NAO added.
Previously, HMRC denied systemic failures in the management
of tax disputes.
The NAO report did not name the companies involved in the
cases which it assessed but sources close to the process said
one involved Goldman and another involved Vodafone