Incoming FCA chair admits “error in judgement” over investment in tax avoidance scheme

Incoming FCA chair admits “error in judgement” over investment in tax avoidance scheme

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”

Incoming FCA chair admits “error in judgement” over investment in tax avoidance scheme

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.

Whitepaper

The Future of Finance is in the CFO's Hands

Business The Future of Finance is in the CFO's Hands

1m
Save a Week a Month Consolidating Accounts

Accounting Software Save a Week a Month Consolidating Accounts

2m
Mitigating Risk Through Internal Control

Legal Mitigating Risk Through Internal Control

3m
Could tax season have run more efficiently?

Corporate Tax Could tax season have run more efficiently?

3m

Related Articles

Restaurants and takeaways make up a quarter of HMRC's named and shamed tax defaulters

HMRC Restaurants and takeaways make up a quarter of HMRC's named and shamed tax defaulters

10h Beth McLoughlin, Managing Editor
HMRC applied to shut down 4,160 businesses in 2018

HMRC HMRC applied to shut down 4,160 businesses in 2018

1m Emanuela Hawker, Reporter
Are HMRC’s Accelerated Payment Notices proof of the taxman’s aggression?

HMRC Are HMRC’s Accelerated Payment Notices proof of the taxman’s aggression?

1m Emanuela Hawker, Reporter
HMRC retrospective loan charge causing problems for contractors

HMRC HMRC retrospective loan charge causing problems for contractors

1m Emanuela Hawker, Reporter
Friction between HMRC and the taxpayer as the number of tribunal disputes continues to rise

HMRC Friction between HMRC and the taxpayer as the number of tribunal disputes continues to rise

1m Emanuela Hawker, Reporter
Property taxation is under increasing scrutiny

HMRC Property taxation is under increasing scrutiny

2m Emanuela Hawker, Reporter
HMRC putting increasing pressure on accountants and lawyers

HMRC HMRC putting increasing pressure on accountants and lawyers

2m Emanuela Hawker, Reporter
HMRC's Profit Diversion Compliance Facility: what do businesses need to know?

HMRC HMRC's Profit Diversion Compliance Facility: what do businesses need to know?

2m Pinsent Masons, Jason Collins and Catherine Robins (partners)