The chairman of an influential Westminster spending watchdog today accused the tax authorities of letting large corporations off paying large sums of money.
In a bruising encounter at the Commons Public Accounts Committee, HM Revenue and Customs chief executive Lin Homer repeatedly denied entering negotiations with big companies over how much tax they would pay, insisting taxmen always sought to settle for the maximum sum they could hope to get if the case went to court.
But committee chairman Margaret Hodge said that there were "many question marks" hanging over the settlements reached in cases such as those involving Vodafone and Goldman Sachs, which have prompted widespread criticism of HMRC's approach.
Margaret Hodge: 'It Seems To Me That You Haven't Pursued Them [Vodafone] Properly'
Referring to the Vodafone case, when the communications giant agreed to pay £1.25bn in tax arrears but was apparently not required to pay interest, Hodge said: "It seems to me that you haven't pursued them properly and you have actually let them off a lot of tax."
And she said that Goldman Sachs had been "let off tens of millions".
In a report last December, the cross-party committee accused HMRC's outgoing permanent secretary for tax Dave Hartnett of striking "cosy deals" with some big companies. The allegation prompted an investigation by the National Audit Office which earlier this month found that, while there were shortcomings in HMRC's approach, the settlements reached in five large cases were "reasonable".
Homer, who was appointed to lead HMRC in January this year, said she accepted criticisms relating to governance arrangements and was aiming to increase the number of commissioners with tax law qualifications from one to three or more, as well as to recruit as many as 1,000 tax-qualified graduates.
But she rejected suggestions that taxmen had done sweetheart deals with big companies, telling the committee: "We settle for the amount we think the Revenue is due. We do not settle for a lesser amount than we believe we could reasonably expect if we litigated."
Hodge told the HMRC boss that her position was "incredible".
"It is the committee's view that there are so many question marks over whether the settlements are in the public interest and properly defend the taxpayer's interests and are fair and equal under the law," said Hodge.
Homer resisted pressure from the committee chairman to hand over documents detailing the precise tax arrangements of large companies which have come into the spotlight, insisting that she was not allowed to do so unless the papers entered the public domain as part of a court case. This might be the case if campaigners UK Uncut win a full judicial review of the Goldman Sachs case, she suggested.
Hodge warned that the committee may refer HMRC lawyer Anthony Inglese to the Attorney General over claims he made under oath in an earlier parliamentary hearing that lawyers were involved "throughout" the Vodafone case.
It was clear that certain key meetings took place in the absence of an HMRC lawyer, she said. But Homer said that her officials were not suggesting that lawyers were present for every single meeting which took place.
Hodge told her: "I think you should take this away and investigate further whether or not somebody who accounts to you did mislead Parliament and we will take away what we will do, with possible reference to the Attorney General, as to whether or not a particular individual accountable to you did mislead Parliament."