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Should large companies pay their full tax liability?

Should large companies pay their full tax liability?

The National Audit Office is to investigate the way tax inspectors from HMRC reach settlements with multinational companies after Vodafone’s £1.2 billion settlement caused uproar.

The ad hoc investigation into the deals HMRC make with large organisations is part of the annual review the NAO conducts on the Revenue’s accounts. It will review the way settlements are reached and the Audit Office will be able to access all tax settlement papers, including those of individual taxpayers.

The NAO will not pass judgement on whether the Vodafone settlement was reasonable, but senior officials from HMRC will have to appear before the commons public accounts committee to defend the settlements made with multinationals.

The Vodafone furore started after information concerning its takeover of Mannesmann was leaked to Private Eye. The leak claimed that Vodafone was to receive a bill for £6 billion relating to the takeover, a claim later referred to as an urban myth by HMRC. The national press reports that the Revenue has not yet launched a formal leak inquiry into the ‘myth’.

However, the £1.2 billion deal has provoked public uproar and a new campaign group, UK Uncut, has been formed that is arguing that large corporations must pay their full tax liabilities in order to avoid more cuts in public spending.

Whilst the public are angered by the Vodafone settlement, at least one government minister has defended the Revenue’s policy of reaching settlement on long-standing tax matters. David Gauke, the Exchequer Secretary, pointed out that these disputes are very expensive, last several years and cost enormous legal fees. He was therefore pleased that the Revenue achieved its largest ever cash settlement. It brought in additional revenue that had been sitting in financial purgatory for years, he added.

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Image: The wine glass by Pen Waggener

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