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The Public Accounts Committee (PAC) recently issued a report which was scathing about HMRC's relationship with big business, its refusal to divulge information to the Committee, and lack of accountability.

Although there does appear ultimately to be some accountability: it can be no coincidence that Mr. Hartnett's retirement was announced just days beforehand. It seems that Mr. Hartnett's involvement with certain "large business settlements" will be subjected to even greater scrutiny, with the National Audit Office reportedly set to examine up to 10 such deals.

Whilst the main report can be found at Public Accounts Committee - 61st Report, the "highlights" are as follows:

1. The Department's refusal to disclose taxpayer information prevents proper scrutiny of the process for reaching tax settlements with large companies.
2. The evidence of the Department's senior officials fails to give us [the Committee] any confidence in the way large settlements are reached. 
3. The Department chose to depart from normal governance procedures in several cases, which allowed Commissioners to sign off on settlements that they themselves negotiated.
4. Governance procedures have lacked the independence and transparency needed to provide sufficient assurance to Parliament.
5. The Department's failure to comply with its own processes resulted in a substantial amount of money being lost to the Exchequer.
6. Those at the top of the Department have not taken personal responsibility for serious errors. 
7. The Department has left itself open to suspicion that its relationships with large companies are too cosy.
8. The Department is not being even handed in its treatment of taxpayers.

This no doubt makes extremely uncomfortable reading for HMRC but it has to be said that Mr. Hartnett made no secret of his approach to litigation and settlements with big business - see HMRC Offers Settlement Deal for EBTs - "Disguised Remuneration". The perception is that by improving the level of service to / channels of communication with large businesses, HMRC has made it easier for those businesses to pay their tax. (Or not to pay their tax, some might argue). And at a point where the UK needs to raise as much revenue as possible, it is also understandable that negotiating a settlement quickly could be seen in a positive light if the alternative is expensive and protracted litigation through the tax tribunals and/or courts - perhaps with some uncomfortable truths about inadequately-drafted law to be discovered in the end.

It has apparently been claimed on David Cameron's behalf that he supports HMRC and that he believes they have been fair to all. This may well prove to have been ill-judged by reference to the public mood. The government of the day undoubtedly recognises that it must try to make the UK a favourable destination for global businesses. But there must also be a recognition that, whilst a relative handful of its "customers" pay the lion's share of tax revenues, the vast majority of HMRC's "customers" are small businesses, small companies, and 'ordinary' taxpayers; and this is a democracy. 

However, unfortunately for HMRC and particularly for some of the parties involved, the headlines arguably suggest that HMRC may have thrown in their hand far too quickly and easily - even wrongly, it appears in one case, by giving up interest that was due.

It remains to be seen whether or not smaller businesses will benefit from the "friendlier" HMRC of big business - or perhaps big business will now 'enjoy' the same HMRC as everyone else. The "large business model" has hitherto been championed as a great success. But rather than rolling out the positives across the range of HMRC services - and to all its "customers" - the fear for all taxpayers and agents must now be that HMRC will decide it must not be seen to negotiate with any "customer" of whatever size. In other words, that HMRC might bounce from one extreme to the other. Anyone with experience of dealing with the tax authority in enquiries will be all too aware that negotiation is a fundamental aspect of that process. A demonstrably even hand across the board is what is really required - as mentioned in the above report.