HMRC cleared of 'sweetheart' tax deals for business Of the five deals examined by the NAO, under the advice of retired tax judge Sir Andrew Park, four were "reasonable" and "at least one may have been better than reasonable." The NAO added that each case was "complex" because often "there is no clear answer as to what represents the right tax liability." However, the NAO criticised HMRC for failing to consult its own lawyers before agreeing to settle cases in litigation, and urged HMRC to update its "Litigation and Settlement Strategy," which does not permit a negotiated deal in some disputes. "In one settlement, the department settled for less than if it had won in litigation," the NAO said. This was reasonable, given the costs and uncertainties of litigation, but was not clearly compatible with the strategy. Sir Andrew judged in that instance it was "the strategy that [was] at fault rather than the settlement." The NAO also expressed sympathy for whistleblowers becuse senior staff had not had their concerns "about the appropriateness of settlements" properly addressed by HMRC. To improve trust within the department, the NAO said HMRC "should explain more clearly to its specialist staff how settlements are reached, including, where appropriate, the rationale for the settlement terms on individual issues." Margaret Hodge, chairman of the Public Accounts Committee, said: "This report confirms my committee's concerns about the uncontrolled way that HMRC has been doing secret deals with large companies. If the final settlements in these cases were reasonable, as Judge Park has concluded, questions still remain over why officials bypassed the proper processes. With billions of pounds of tax at stake it is extremely worrying that the department failed to involve its own specialists in the final negotiations and follow its own rules by settling for less than it could have won in litigation.