MPs hit out at Vodafone 'tax let-off'

HM Revenue & Customs officials were criticised yesterday for allowing Vodafone to pay just £1.25bn in a tax dispute with the Government, despite a potential tax bill of what could be as much as £8bn.

MPs from the Commons Public Accounts Committee quizzed tax officials over deals made with Vodafone and investment bank Goldman Sachs. HMRC branded reports earlier this year that Vodafone escaped paying £6bn in tax "absurd".

But Stephen Barclay, an MP on the committee, put the possible sum even higher. "We are looking at potentially £8bn of tax lost," he said. "We're looking at a company that was given five years to pay even though it was sitting on a cash pile."

HMRC officials were also questioned about a debt deal with Goldman Sachs, which is believed could have cost the taxpayer a potential £10m.

Tax chief Dave Hartnett said an error that slashed Goldman Sachs' debt was dealt with through a staff member's annual appraisal. HMRC has been accused of giving Goldman a "sweetheart" deal that waived £10m of interest on a £30m bill from a failed tax avoidance scheme on bankers' bonuses. Mr Hartnett is said to have personally sealed the agreement with a Goldman executive last November, after being advised by an official that there was a "legal impediment" to charging interest.