HM Revenue and Customs chief Dame Lin Homer has been accused of allowing HSBC to get away "scot free" over the activities of its private Swiss bank.
Appearing before the Commons Public Accounts Committee, Dame Lin confirmed that it was "unlikely" that HSBC would face prosecution over claims its Swiss branch routinely helped wealthy clients evade tax.
Her admission drew an angry response from MPs on the committee, who said it was "extraordinary" that HSBC would face no action from the British authorities even though it was domiciled in the UK.
Dame Lin - who announced on Monday that she would be standing down in April after being made a dame in the New Year's honours list - faced further criticism after she claimed HMRC's customer service was improving, even though almost one in five calls were not answered within six minutes.
Her disclosure that HSBC was unlikely now to face prosecution came after it was reported earlier this month that the City watchdog - the Financial Conduct Authority - had ruled out regulatory action against the bank.
Dame Lin said they had reviewed the data on HSBC which they said had been passed to the French authorities by a whistleblower at the bank, but they did not believe there was the basis for criminal action.
"We have had another look. We think it is unlikely that there will be prosecutions," she said.
Conservative MP Stephen Phillips complained: "It looks as though they have got away scot free."
He added: "I - and I suspect most Members of Parliament - would find it extraordinary that a bank that is domiciled in this jurisdiction with oversight of its Swiss subsidiary has not had action taken against it either by its regulator or by you, who are responsible for investigating it and passing papers to the CPS (Crown Prosecution Service) to conduct criminal prosecutions if appropriate."
Dame Lin retorted: "I can make no comment on your opinion. We have to progress on the basis of what we and the CPS think is possible."
She also came under fire after she said 81% of calls to HMRC were answered within six minutes.
She said they had been getting "better and better" after the first three months of last year when answering rates were so bad she had issued a public apology.
"We were quick and effective in recognising that we had created poorer customer service than was acceptable. We took early, I think very effective, action," she said.
Mr Phillips said: "It's not really 'better and better' is it - 81% of calls answered within six minutes?" Dame Lin replied: "I think that is."
She added: "When you deal with 45 million customers there will always be some that you do fail. There are times of day and times of week that are not as good as others."