Tax disputes to be made more 'transparent'

HMRC has announced new governance arrangements in order to provide 'greater transparency, scrutiny and accountability' for significant tax disputes.

The new arrangements, which aim to make tax collection more effective and efficient, come after a report by the Public Accounts Committee in December that criticized the handling of large settlements in which governance arrangements were bypassed or overlooked. In some cases it found 'clearly unacceptable' practises where the same officials had both negotiated and approved settlements.

As a result, HMRC will appoint a new 'assurance' Commissioner responsible for overseeing all large settlements over £100 million who will remain impartial and have no role in any taxpayer's private and individual affairs.

It will also roll out new rules in which all cases above this level will be referred - by a panel of senior tax professionals - to an additional three tax experts including the assurance Commissioner. Currently, this referral is required for settlements of £250 million or more and lowering it is expected to double the number of cases under scrutiny.

Other updated measures include a regular review of settlement processes, collaboration between HMRC's Audit and Risk Committee and the National Audit Office in overseeing tax settlements, and greater transparency in all tax disputes including the publication of an annual report.

David Gauke MP, Exchequer Secretary to the Treasury, said: "I welcome HMRC's new governance arrangements, which will ensure a clearer separation between those who attempt to reach settlements and the Commissioners who consider them. Settlements form an important part of HMRC's large business strategy. This internationally recognised approach has not only led to an increase in tax collected in recent years, it is contributing to the Government's drive to make the UK more competitive in a global market. This will continue to be vitally important as we work to rebuild our economy."