Inland Revenue Hits Back Over C&W Tax Deal

by Robin Pilgrim, LawAndTax-News.com, London

07 April 2003

Inland Revenue chief, Sir Nicholas Montague has responded to suggestions that the settlement recently agreed with regard to Cable & Wireless' tax liability was for 'an extremely low sum'.

The telecommunications company had ringfenced £1.5 billion in order to deal with an outstanding tax liability which resulted from a 1999 deal with Deutsche Telekom, but announced in late March that it would be paying the Inland Revenue just £380 million to cover this and other unspecified tax liabilities dating back over 10 years.

In light of this, shadow Treasury Minister for the Liberal Democrats, Norman Lamb called for the case to be re-opened, suggesting that: 'Such a wide discrepancy raises a lot of doubt about the ability of the Revenue to clamp down on tax avoidance at a time when the public finances are being stretched by the war in Iraq.'

In an angry letter to Treasury Select Committee member, Mr Lamb last week, Sir Nicholas argued that: 'I can assure you it is wholly fair,' adding that: 'I am disappointed at your continuing insinuations that we are conniving at tax avoidance: these fly in the face of the evidence.'

Speaking to the Telegraph on Thursday, the shadow Lib Dem Treasury Minister described the tax agency chief's response as 'petulant and arrogant', and revealed that he will continue with efforts to have the case re-examined. 'It seems to me perfectly reasonable for MPs to question these actions by government agencies. If they want us to believe it's all proper, they should be confident enough to defend their positions without such petulance,' he told the UK newspaper.

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