An all-party group of MPs slammed the UK tax administration for settling a long-standing dispute with General Electric over a disputed tax bill of around $ 1 billion.
The dispute between GE and HM Revenue & Customs had been settled in a clash at the UK Supreme Court.
However, it emerged this week that the two sides had settled out of court, with GE having to pay $ 112 million in deferred tax.
Members of the all-party parliamentary group on anti-corruption and responsible taxation criticized the development in a series of twitter posts.
“Soft deals like this see the taxpayer losing millions in lost tax revenue,” MEPs said.
The group previously called for more public scrutiny of HMRC on corporate tax matters.
Margaret Hodge, president of the APPG, added that the settlement seemed “pitiful” compared to the amount of tax that HMRC had accused GE of owing.
“It is only by lifting the lid of these deals that taxpayers will regain confidence in HMRC to see if they are really getting their money’s worth or if they are being taken for a ride,” she said. .
George Turner, director of the TaxWatch think tank, which published a report on the dispute last year, also argued that “questions need to be asked” about the settlement.
HMRC strongly refuted the criticism. “HMRC does not make love agreements”, he responded to the APPG on Twitter.
“Our [litigation and settlement strategy] states that we cannot legally pay an amount less than what we would reasonably expect to get by going to court. “
GE said: “We are delighted to have reached an agreement with the UK tax administration, resolving this dispute in its entirety without any fault being attributed to either party.”
The case stems from a 2005 deal in which GE persuaded HMRC to approve a tax deduction on a transaction, allowing the American group to circulate billions of dollars between the United States, the United Kingdom and the United States. Australia without violating recently enacted anti-arbitration tax laws.
But in 2018, the tax office accused GE of not disclosing key information relating to the 2005 deal, a claim the company denied. The England and Wales Court of Appeal ruled in April that HMRC could not pursue the fraud claim as the statute of limitations had expired.
As part of the settlement, GE agreed that $ 944 million in interest deductions it claimed would be denied. However, a person familiar with the settlement said the company receives tax breaks that offset the cost of denied deductions.
GE will pay a deferred tax charge of $ 112 million, or about 10% of the potential impact of $ 1.1 billion the company reported in its 2020 returns.
The UK tax administration said: “HMRC has settled a long-standing tax dispute dating back to 2005. This is a good result for the UK taxpayer and a result we reasonably expected in court.”