4 Overall leadership of the Department
24. There is little evidence within the Department
of personal responsibility being taken for serious errors. The
Permanent Secretary for Tax initially told us that no disciplinary
action had been taken against anybody for the mistake in the settlement
that led to a loss in interest due to the Department.[66]
In a later hearing, he eventually disclosed that a review had
been undertaken by the head of the Department's Large Business
Service. This resulted in the error being taken into account in
the relevant officer's annual appraisal, and no bonus was paid
to that individual that year.[67]
However, it was not clear that the senior staff who designed,
operated and oversaw the system in which the mistake was made
were held accountable in the same way.[68]
When asked if he had considered his own position, the Permanent
Secretary for Tax said he had no plans to resign.[69]
25. The Permanent Secretary for Tax did assure us
that the Department had learned from its mistakes and, in relation
to the case where the error involving interest was made, he claimed:
"we have made sure that a mistake like that cannot be made
again".[70] Nevertheless,
he was unable to give us an exact answer on the scale of mistakes
made by the Department each year and did not explain how he expected
managers to ensure their staff learn from mistakes when they are
made.[71]
26. We are concerned about the perception that the
Department has an unduly cosy relationship with large companies
it is trying to settle tax disputes with. The Permanent Secretary
for Tax has had a significant number of lunches and dinners with
companies, tax lawyers and tax advisers - as many as 107 such
engagements in two years.[72]
The publication of details of hospitality received from companies
is a welcome transparency measure, but would only be meaningful
if supported by information about the extent to which the Permanent
Secretary for Tax is also involved in negotiations with, or decisions
affecting, those companies.[73]
27. The Permanent Secretary for Tax assured us that
he does not have lunch or dinner with companies that he is negotiating
with, but conceded that: "I find other ways of doing things…maybe
a cup of coffee in my office".[74]
The absence of full transparency about his relations with companies
risks the perception that he has acted improperly or exercised
poor judgement.[75]
28. The Department appears to be showing large companies
greater leniency in the time it is allowing them to pay their
tax liabilities. We heard that large companies have been given
up to 10 years to pay their liabilities.[76]
In contrast, other taxpayers such as small businesses and individuals
on tax credits are not permitted a similar amount of time to pay
what they owe.[77] This
sort of inconsistency raises significant misgivings about whether
the Department is treating different groups of taxpayers fairly
and reasonably.[78]
66 Q 113 Back
67
Qq 701-705 Back
68
Qq 154-156 Back
69
Q 751 Back
70
Qq 111-112 Back
71
Qq 117-118 Back
72
Q 192 Back
73
Q 713 Back
74
Qq 190, 194-195 Back
75
Qq 71-72, 190, 193-194, 717 Back
76
Q 214 Back
77
Qq 723-725 Back
78
Qq 220, 223-226, 723-727 Back
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