HMRC has hit back at newspaper reports that senior civil servants are having part of their tax bills paid with public money, saying the tax arrangements involved are 'quite common practice by employers'.

A Daily Telegraph investigation claimed that some government departments were paying the tax due on employee benefits such as official cars, first-class rail travel and rent-free accommodation under a deal agreed with HMRC more than 10 years ago.

Among those who benefited from the scheme, which the paper claimed could see pay packages boosted by up to £30,000 a year, were Phillippa Williamson, the former head of the Serious Fraud Office; Sir Jeremy Heywood, the cabinet secretary; and Sir David Nicholson, the head of NHS England.

Nicholson, for example, has received £320,303 in benefits over the past six years, according to the report, which includes the cost of a rented flat in London, the use of a chauffeured car and first-class train journeys. The figure includes an estimated almost £110,000 in tax paid for by his department.

The decision by the SFO to pay Williamson almost £100,000 to commute between her home in the Lake District and its offices in London from 2009 to 2012 has already been criticised by the Public Accounts Committee (PAC). The total included almost £40,000 in tax.

Conservative MP Richard Bacon, who is a member of the PAC, said: 'Most taxpayers would be surprised to find that this sort of thing is tax-free. These are out of line with what one would expect from the way people in the private sector are treated. Taxpayers are already paying a lot for these people. I don't think they would be expecting to dig into their pocket to pay for the tax on the benefit as well.'

Responding to the newspaper report, HMRC said: 'We can't discuss individual cases. However, cars provided by an employer that are available for employee use are a benefit in kind for the employee and are taxable. These rules have been in place for 37 years.

'Employers may choose to pay the tax due on the benefit. If so any such payment will constitute an additional benefit - which will also be taxable on the employee. This is quite a common practice by employers and is a matter between employer and employee. HMRC makes sure all the tax due is paid.'

However, HMRC figures suggest that only 20,000 of 3.6m benefit in kind claims are paid for by employers.