Tax chiefs are facing a mauling by MPs for bending rules to do favours for big firms at a cost of millions to the taxpayer then hiding the details from a watchdog.
Calling for senior officials to face punishment for a series of costly errors and failures, the Public Accounts Committee warned millions more were at risk unless procedures were tightened.
Its report called for safeguards to be put in place to avoid the impression that HM Revenue and Customs (HMRC) enjoyed an "unduly cosy" relationship with major companies.
And the MPs demanded explanations of why officials wrongly claimed they could not discuss deals with the committee and gave "imprecise, inconsistent and potentially misleading" answers.
The report represents the conclusions of a fiery public inquiry by the influential committee, that at one point saw the country's top tax official Dave Hartnett accused by the chair of lying.
Banking giant Goldman Sachs was allowed to skip a multi-million pound interest bill on unpaid tax on bonuses after Mr Hartnett was wrongly advised there was a "legal impediment" to collecting it. The potential cost to the taxpayer is officially put at £8 million but the committee was given evidence from a whistleblower that the sum could be as high as £20 million.
HMRC flatly rejected the committee's conclusion that there were systemic failures in its management of tax disputes.
"The report is based on partial information, inaccurate opinion and some misunderstanding of facts," a spokesman said.
The spokesman denied the error made in the Goldman Sachs case was evidence of a wider, systemic failure and rejected the claim that the loss to the taxpayer could be as high as £20 million.
"This assertion, based on untested, leaked information, is without foundation," the spokesman said.
© 2011 Press Association