Revenue & Customs (HMRC) has come under intense scrutiny after MPs published a damning report into how big corporations enjoy a "cosy relationship" with the taxman.
The Public Accounts Committee (PAC), chaired by Margaret Hodge, called for senior officials to face punishment for a series of costly errors and failures that has meant more than £25 billion in tax revenue going uncollected.
Hodge, speaking on the BBC's Today Programme, said: "It is a very uncomfortable state of affairs. I find it incredible that we were brought this information by a whistle-blower. If that person hadn't come forward, we would never have known about this."
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 multimillion pound interest bill on unpaid tax on bonuses after 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 whistle-blower Osita Mba, a solicitor for HMRC, that the sum could be as high as £20 million.
But 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.