Inland Revenue chairman Sir Nick Montagu has come out fighting following press criticism of his handling of a controversial PFI deal, which saw £220m of property sold to a company registered in the tax haven of Bermuda.
In an exclusive interview with Accountancy Age this week, Sir Nick said he had no intention of resigning, and declared his department’s deal with Bermuda-registered Mapeley Steps to be an ‘exceptional PFI deal’. He said he had spoken privately with chancellor Gordon Brown and received his ‘complete support’.
Sir Nick hit the headlines this week when a Treasury report acknowledged that errors were made in the handling of the PFI deal. Some press reports even cast doubt over the future of Sir Nick at the Revenue.
His defiance comes just weeks before another appearance before MPs on the Treasury select committee, when he is expected to be grilled on this issue and others.
‘I won’t be resigning. There was no suggestion from ministers that I should resign. I have talked personally to the chancellor and have his full support. This is a non-issue, in terms of resignations,’ said Sir Nick.
Despite this, he acknowledged that his department was guilty of two ‘big mistakes’. He described his failure to alert paymaster-general Dawn Primarolo about the deal as ‘a pure oversight’. He added that sending out a press release, which claimed the deal was struck with UK-based Mapeley, rather than Bermuda-based Mapeley, was a ‘pure cock-up’.
As part of a 1998 government initiative, the Revenue and Customs were asked to sell their property portfolios in PFI deals. According to Sir Nick, the departments had to achieve the best value for money possible as part of the initiative.
The deal with Mapeley, which was signed early in 2001, would save the British public £1bn over the course of the 20-year contract, said Sir Nick.
But the fact remains that the Revenue has been perceived to be adopting a ‘do as I say, and not as I do’ approach to running the department. The Revenue has been extremely vocal in its aggressive clamp down on tax avoidance and forthright in its criticism of tax havens.
When asked what position the Revenue would take on UK businesses seeking deals connected to tax havens, Sir Nick was non-committal. ‘We will clamp down on businesses that engage in artificial avoidance schemes,’ he said.
But Sir Nick did say he would address his department’s internal procedures following the blunder. ‘We need tighter project control.There also has to be tighter control at board level,’ he said.
Sir Nick said the mistakes were the result of a lack of communication between project teams and the board, and between the board and ministers.
‘We had extremely focused and successful project teams that were isolated from the department, and so warning bells did not sound,’ he said.
The Revenue’s adviser to the Mapeley Steps deal was Deloitte & Touche. Sir Nick said the Big Four firm should not be held accountable for the blunder. ‘We are the people that ultimately have to carry the can,’ he said.