UK Government Receives Billions From Four Sweetheart Tax Deals
02 May 2013
Posted by: Author: Jason Gorringe
Source: Jason Gorringe (Tax-News.com, London)
A leaked document has revealed that so-called "sweetheart" tax deals, in which tax officials and corporations settle disputes behind closed doors, regularly bring in more than GBP1bn for the British Government.
The document, sent in 2011 by a former head of tax at HM Revenue and Customs to the exchequer secretary at the Treasury, reveals that just four of these secret agreements were worth GBP4.5bn in total. It says: "In 2006, HMRC adopted a new approach to reaching tax settlements with large business through building constructive relationships and encouraging mutual openness and transparency, increasing certainty for business and reducing the time taken to resolve issues.
"Settlements of above GBP1bn are now not uncommon and GBP4.5bn … has come from just four settlements with bespoke governance."
However, the document does not disclose the total tax liability of the firms involved in the four deals. Margaret Hodge, the chair of the Commons Public Accounts Committee, promised to investigate the matter, saying: "If we got GBP4.5bn in, how much did we not get? That is what taxpayers will want to know, and I'll be raising this with HMRC through the committee.
"Whilst it is in the interest of the government to collect monies, these are huge sums. If there were deals involved, we need to know that the companies paid a fair amount on the profits they made from their businesses in the UK."
An HMRC spokesman said the committee could not comment on individual cases. He said "The National Audit Office looked into the 'bespoke governance' settlements, finding they represented good value for the country and were properly carried out. However, since then we have significantly improved the transparency of the governance around our large business settlements."