The Financial Conduct Authority’s incoming chairman admitted to investing in a tax avoidance scheme which forced him to repay £114,000 to HMRC, describing it as “an error in judgement.”
Appearing before the Treasury select committee for a hearing into his appointment, Charles Randell took responsibility for the mistake but said the scheme had been discussed with senior policy officials at HMRC “who had indicated that they approved of it.”
He added: “It is clear to me now that, far from taking any comfort from that, I should have seen it as a warning signal, because the mere fact that an informal assurance was seen to be necessary should have told me that this was an investment for which there was no specific statutory framework.”
Randell said that he dispensed of the services of his financial adviser who promoted the scheme to him in 2013 after HMRC wrote to him about his involvement as an investor.
The Ingenious Film Partners 2 LLP scheme used specific accounting treatments for producing films to reduce investors’ personal tax liability, and attracted many famous investors, particularly footballers.
After a tax tribunal found that elements of the scheme constituted tax avoidance in 2016, some investors sued Ingenious Media.
Committee chair Nicky Morgan questioned whether Randell could understand how to ordinary people – “I mean those who are not seeking to be FCA chair” – the scheme would appear to be a “rather clever tax wheeze”, to which Randell replied “yes I can.”
She noted that the scheme provided investors in the first year an amount of tax relief equal to the value of the investment.
Randell was previously partner at law firm Slaughter & May and was appointed as FCA Chair earlier this year. He will take up the role from 1 April.