Big firms let off £25BILLION in taxes: As families are chased for every penny, corporate giants dodge their massive bills

6p could be cut from basic rate of tax if £25.5bn bill was paid in full

Revenue and Customs has 'very few people' with deep knowledge of tax affairs, says Margaret Hodge

Goldman Sachs deal 'would never have come to light without whistleblower'



Chief executive Dave Hartnett had 107 lunches with big firms' tax lawyers and advisors between 2007 and 2009



Britain's biggest firms owe the taxman up to £25.5billion, but are regularly let off the hook, MPs say today.

The sum is equivalent to £1,000 for every British family - or the equivalent of 6p being cut from the basic rate of income tax.

While families, shopkeepers and small businesses are forced to pay their bills in full, big businesses are striking favourable deals and have an 'far too cosy' relationship with HM Revenue and Customs.

The £25.5bn is HMRC's own 'ballpark estimate' of the maximum tax liabilities of big businesses

They are having their tax bills cut or managing to avoid paying interest.

Dave Hartnett, the out-going HMRC chief executive, was wined and dined 107 times by big firms' tax lawyers and advisors between 2007 and 2009, the report revealed.

Margaret Hodge, Labour chairman of the Public Accounts Committee, accused the tax office of hiding behind a 'veil of secrecy' to keep deals private.

She said the panel of MPs had to rely on a whistleblower and a private eye to find out about the questionable deals.

A controversial deal struck by Goldman Sachs which allowed them to avoid paying up to £20million would never have come to light if it had not been for the insider.



CHIEF EXEC AT CENTRE OF TAX STORM 'WINED AND DINED BY BIG BUSINESS'

Unlike millions of hard-up taxpayers, Dave Hartnett (pictured) will never struggle to find money to pay his bills, or face the choice between heating and eating.

The 60-year-old Permanent Secretary at HM Revenue and Customs, pictured, is due to retire next summer on between £75,000 and £80,000 a year, and will also get a lump sum of between £160,000 and £165,000.

When he retires, he may miss the programme of corporate hospitality that he has enjoyed during his time at HMRC.

Between 2007 and 2009, he was entertained 107 times, mostly at breakfasts, lunches and dinners, by banks and law and accountancy firms.

In total, the report says, HMRC is seeking to resolve more than 2,700 issues with the biggest companies, including disputes over outstanding tax, with potential tax at stake of £25.5billion.

It said: ‘We have serious concerns that large companies are treated more favourably by HMRC than other taxpayers.’

It criticises the department’s ‘specific and systemic failures’.

Campaign group UK Uncut have vowed to pursue firms for unpaid tax through the courts.

Mrs Hodge, speaking on BBC Radio 4's Today programme, said this morning that they discovered a lack of accountability.



‘This is a bit like David and Goliath,' she said. 'The big companies have very expensive lawyers and Advisors. HMRC have very few people who have in-depth knowledge of tax affairs.



‘There is no dissociation between those who negotiate and authorise them (the deals).

'They hide behind a veil of secrecy claiming taxpayer confidentiality so there is no accountability as to whether these deals provide good value for money.’

She accused HMRC of striking ‘sweetheart’ deals with big businesses which would be denied to hard-working families, shopkeepers and small businesses.



Mrs Hodge said the panel had to rely on the testimony of a whistleblower as well as a private eye in a situation she described as ‘very unconscionable'.

Banking giant Goldman Sachs was allowed to skip a multi-million pound interest bill on unpaid tax on bonuses after outgoing chief executive Dave Hartnett was wrongly advised there was a 'legal impediment' to collecting it.



The potential cost to the taxpayer is officially put at £8million but the committee was given evidence from a whistleblower that the sum could be as high as £20million.



In its report the MPs expressed astonishment that HMRC 'chose to depart from normal governance procedures' by allowing the same senior officials to both negotiate and approve such deals.



Worse, it said, the Goldman deal was done 'without legal advice' or an official note being taken of the meeting, with officials relying on the firm's records.

Margaret Hodge, Labour chairman of the committee, says the report, published today, is ‘a damning indictment of HMRC’.



Scathing: Margaret Hodge, Labour chairman of the Public Accounts Committee, said the report is a 'damning indictment of HMRC'

She is particularly critical of the refusal by the department’s executives to answer questions from MPs about details of its dealings with big business.

They insisted that there were issues of confidentiality, but Mrs Hodge dismissed these claims, saying they are using ‘a cloak to protect the department from scrutiny’.

The report says executives, such as the Mr Hartnett , gave ‘imprecise, inconsistent and potentially misleading answers’, and states: ‘This situation is entirely unacceptable.’

It warns: ‘The department has left itself open to suspicion that its relationship with large companies is too cosy.’



The £25.5billion is HMRC’s own ‘ballpark estimate’ of the maximum potential tax liabilities of big businesses, calculated before any proper investigation has taken place.

The figure can be dramatically cut by a business legitimately applying for a relief, or being able to offset a tax liability against a loss made in the previous financial year.

'This report will increase suspicions that big businesses are treated differently'

The report is published days after Mr Hartnett, 60, announced his plans to retire next year following a barrage of criticism surrounding his running of the department.

He will not be leaving empty-handed. He stands to scoop a pension which is currently worth between £75,000 and £80,000 a year.

This gold-plated sum will be paid after Mr Hartnett has taken a lump sum of between £160,000 and £165,000 from his £1.7million pension pot.

The report is critical of his attendance at a ‘significant’ number of lunches and dinners ‘with large companies with whom HMRC was settling complex tax disputes’.

Emma Boon of the TaxPayers’ Alliance said: ‘Ordinary taxpayers often feel that they are treated harshly when they make genuine mistakes because of our complicated tax system.

‘This report will increase suspicions that big businesses are treated differently.’

Some of the big business settlements are currently the subject of a separate investigation by the Government’s spending watchdog, the National Audit Office.

HMRC has been responsible for a catalogue of errors recently. Around 6million taxpayers are currently getting letters saying they have over-paid, and can expect to get back £400 each, equal to £2.5billion. Around 1.2million others are being told they need to pay an average of £600 more.

Yesterday an HMRC spokesman rejected the MPs’ report, saying it was based on ‘partial information, inaccurate opinion and some misunderstanding of facts’.

He said the £25.5billion figure was ‘a ballpark estimate of maximum potential tax liabilities’. It is not ‘actual tax’ that is owed or unpaid.

He added: ‘In many cases, when HMRC has looked at the full facts, it becomes clear that there is no further liability at all.’