.png)
.png)
HMRC are to appoint an overseer for all future disagreements with big business, in an effort to prevent more of the controversy that followed last year’s settlements with Vodafone and Goldman Sachs.
As part of new governance arrangements for major tax disputes, the Revenue has created the role of assurance commissioner, who will be responsible for supervising all cases that concern amounts in excess of £100 million.
He or she will have no role in individual taxpayers’ affairs, but will be part of a three-person team of tax-specialist commissioners brokering significant settlements with companies, following guidance from a panel of senior tax professionals.
A commissioner decision is currently required for disputes involving £250 million or more. The new arrangement will almost double the number of cases scrutinised by commissioners, claimed HMRC.
The assurance commissioner – to be appointed as second permanent secretary – will also take charge of a systematic review of the processes used in settled cases covering all the Revenue’s tax settlement work.
The department’s overhaul of it governance – which will see a new code for all tax disputes, and an enhanced role for the audit and risk committee in overseeing settlements – is an attempt to provide greater transparency, scrutiny and accountability.
It comes in reaction to severe criticism by the Commons’ public accounts committee, which last scrutinised HMRC’s much-reported handling of multimillion tax disputes with telecoms giant Vodafone and Goldman Sachs, a leading investment bank.
The result of the committee’s examination was a report that chairperson Margaret Hodge MP called a ‘damning indictment of [the Revenue] and the way its senior officials handle tax disputes with large corporations’ and which ‘uncovered both specific and systemic failures’.
The creation of the assurance commissioner role ‘deals with one of the public account committee’s key concerns… in a way that is practical, affordable and does not require legislation,’ said the new HMRC chief executive, Lin Homer.
The Chartered Institute of Taxation said the new governance set-up would help repair the damaged relationship between taxpayers, the tax profession and the taxman.
‘For the tax system to operate effectively there must be mutual trust,’ said the body’s president, Anthony Thomas.
‘That trust has been severely dented in recent times. A major factor has been the perception that HMRC treat big business more favourably than small firms and ordinary taxpayers.’
Mr Thomas added that ‘increasing transparency will increase trust. Hopefully, this will be followed by improvements to HMRC’s communications, which would also contribute markedly to improving understanding and hence trust,’ he said.
James Bullock, tax partner at law firm McGrigors, expressed the concern that ‘there will still not be sufficient independence in place’.
He went on to question the proposed panel of senior tax professionals who will advise the assurance commissioner and his or her colleagues.
‘Will they be... still in practice? If so, it may be difficult to view them as wholly impartial,’ said Mr Bullock.
‘Given that one of the less-publicised concerns around HMRC's previous system was the perceived closeness to particular tax professionals and firms, this could open up the new system to accusations of cosiness. I very much hope this does not turn out to be the case.’
