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Tax disputes: MPs defend HMRC whistleblower

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MPs have backed Osita Mba, the HMRC whistleblower who has contended that the Goldman Sachs settlement may have cost as much as £20m and argued that HMRC routinely issues press releases disclosing ‘sensitive personal details of individuals convicted of (and sometimes charged with) tax and benefit offences’.

A specific gateway was required to issue such releases lawfully, Mba said in evidence submitted to the Public Accounts Committee (PAC), and HMRC applied Commissioners for Revenue and Customs Act 2005 s 18(2)(a), which permits a disclosure made for the purpose of a function of HMRC so long as the disclosure does not contravene any restriction imposed by the Commissioners.

► Tax disputes: NAO to scrutinise five settlements as HMRC faces legal challenge

‘The Commissioners consider that the duties of transparency and accountability HMRC owes to the general body of taxpayers override any duty of confidentiality it owes to the individual customers concerned; and that in the circumstances such disclosures constitute a lawful interference with the rights of the affected customers to private and family life under human rights legislation,’ he wrote.

‘The Commissioners are well aware that s 18(2)(a) similarly authorises the disclosure of information about corporate customers involved in controversial settlements to select committees of the House of Commons that have oversight functions over the department …

‘As the recent controversy surrounding the Vodafone and Goldman Sachs settlements shows, such disclosures are clearly necessary in order to assure Parliament and the public that cases involving large sums of money are being settled appropriately.’

Mba argued that recommendations made by the PAC and the Treasury Committee for increased transparency in the area of large and complex tax cases, and for assuring Parliament and the public that due process was being followed, ‘have not and will probably never achieve the desired result’.

He concluded: ‘It is equally clear that HMRC’s Solicitor’s Office and the National Audit Office cannot be relied on wholly to protect the public interest in regard to the provision of internal and external governance over the collection of revenue from the biggest taxpayers in the country by the Commissioners.’

Jim Pickard, Westminster correspondent for the Financial Times, reported that Margaret Hodge, PAC Chairman, told him: ‘I think the evidence given by the whistleblower has been hugely important in uncovering vital issues and we would want to ensure that he was properly treated and that his rights under the whistleblowing legislation are properly protected.’

Legal requirement

Hodge said it was ‘extremely disappointing’ that senior HMRC officials were ‘not prepared to cooperate with our enquiry in a spirit of openness’.

The PAC accepted the need for confidentiality to protect individual taxpayers but Hodge warned that confidentiality must not be used as ‘a cloak’ to protect HMRC from scrutiny. ‘It is absurd that we had to rely on the media and the actions of a whistleblower to find out about the details of individual settlements,’ she said.

But Dave Hartnett, Permanent Secretary for Tax, insisted during the PAC hearings that taxpayer confidentiality prevented him from answering detailed questions relating to Goldman’s tax affairs.

Responding to the PAC report, HMRC said: ‘Senior HMRC officials sought to be co-operative by providing as much information as possible within the legal constraints of taxpayer confidentiality under which they work.

‘Taxpayer confidentiality is a legal requirement, fundamental to tax administration in the UK and across the world. Parliamentary scrutiny is delivered via the NAO to whom HMRC provide unfettered access to all their papers.’

References to Tax Journal articles

Osita Mba referred to the following Tax Journal articles in his written evidence to the Public Accounts Committee.

HMRC dispute resolution procedures under scrutiny by Andrew Goodall (20 January 2011)

View from HMRC: our approach to dispute resolution by Anthony Inglese, Geoff Lloyd (6 January 2011)

Litigation and Settlement by Dave Hartnett (11 June 2007)

A Sterile Activity by J Gribbon (22 September 1997)