Major victory: NAO to investigate HMRC’s dodgy deals

“So great is the concern that the National Audit Office is now launching an inquiry into the way that HMRC reaches tax settlements with major clients. When the NAO report comes out, top tax officials can expect a grilling from MPs on the public accounts committee… The furore is an embarrassment for the government. It means that, in the age of austerity, there is a perception – whether fair or not – that HMRC is selling out to big business.”

HMRC’s shady backroom deals with tax-dodging corporations are going to come under the spotlight. This should help sink the idea that “there is no alternative” to the cuts. And it’s all thanks to people who have taken to the high streets up and down the country.

Last week the National Audit Office (NAO) announced that it was undertaking an “ad hoc” inquiry into how HMRC settles its large tax disputes with major multinationals like Vodafone. As understated ever, this announcement by the NAO may not seem like much, but it’s going to mean a tough time for those at the top of HMRC, like Dave Hartnett, who have been letting companies off enormous tax bills.

As part of the inquiry, HMRC will be required to hand over all of the documents relating to how it settles these disputes. In the case of Vodafone that’s going to involve years of legal documents showing that the total that could have been claimed by HMRC was massively larger than the tiny sum they finally settled for. That won’t make them look good. Then, HMRC’s top civil servants will need go for a grilling by the Commons’ Public Accounts Committee, arguably one of the two most influential parliamentary committees, to try and justify their “massive cave in”. And the NAO are hugely respected for what they do. Independent of government, thorough and measured, their findings aren’t going to make good reading for the coalition.

It’s not just going to make the coalition look bad because failing to collect billions in tax from rich companies is unfair. And it’s not just going to make the coalition look bad because making dodgy backroom deals with giant companies makes you look about as straight as a boomerang. It’s because with every revelation the NAO makes (and if everything we’ve heard is right there will be a few) it will go step by step to killing the coalition’s main argument that “there is no alternative”. When it’s all laid out in black and white that you could claw back billions from the richest companies, claiming that destroying the services that help the poorest most is necessary becomes an open and shameless lie.

But none of this would have happened if people hadn’t hit the streets the length and breadth of the country. The pressure coming from people on the streets has made this an issue – an issue the government can no longer avoid. This investigation does not mean we’ve stopped the cuts, but killing the idea that “there is no alternative” is an important first step.

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NAO to probe HMRC settlements with multinationals
National Audit Office to investigate UK tax deals with multinationals