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HMRC settlements: parliamentary scrutiny

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Liberal Democrat MP Adrian Sanders asked the Chancellor if he would make it his policy to refer all tax disputes concerning liabilities greater than £500 million for parliamentary scrutiny prior to action by HMRC.

David Gauke, Exchequer Secretary to the Treasury, replied on 24 January: ‘The government have no plans to refer tax disputes for parliamentary scrutiny. There is already a statutory framework for settling all tax disputes. HMRC are authorised to settle disputes with taxpayers. However, where a settlement cannot be reached in that way the case is referred to the tax tribunal.’

Sanders asked the Chancellor if he would assess ‘the potential effects of the tax settlement between HMRC and Vodafone Group plc on the operation of anti-avoidance rules for controlled foreign companies’.

Gauke replied: ‘The controlled foreign companies (CFC) rules have been subject to challenge in both the European and UK courts regarding their compatibility with EC law. In 2009 the Court of Appeal found in HMRC's favour in a case brought by Vodafone. This did not determine any liability, but it allowed HMRC to open discussion with Vodafone and other customers about how the rules actually applied in practice.

'The government are also consulting on reform of the CFC rules to ensure they are more closely targeted on artificially diverted UK profits.’