The taxman’s prosecution office, set up in the wake of the London City Bond
scandal, has been plunged into turmoil after the National Audit Office qualified
its accounts over poor accounting for lawyers’ fees, as it also emerged that its
chief operating officer hired his wife as a consultant.
The NAO’s report into the accounts of HM Revenue & Customs’ Prosecution
Office was only released in full last week, despite having been laid before
parliament as early as the end of January.
COO Dave Partridge was jointly responsible for employing his wife as an HR
consultant at the department, the report says.
She earned £27,775 (excluding VAT) for the work.
Comptroller and auditor general Sir John Bourne said: ‘In my opinion,
however, it would have been more appropriate and proper for the chief operating
officer to have disqualified himself from the selection process.’
NAO staff had indicated that they regarded the appointment as ‘novel and
contentious,’ though it subsequently received the seal of approval from Treasury
The department’s accounts were heavily qualified over poor accounting for
legal fees. There was no way of knowing how much the new department had spent on
lawyers, Sir John indicated.
Since some large invoices were still coming in from 2004, the department
could not know with certainty how much it was spending now. Nor were rates for
counsel in 2005/06 agreed in advance.
‘RCPO has been unable to provide sufficient evidence that counsel fee
expenditure for 2005/06 (£15.7m) and accruals at 31 March 2006 (£11.8m) were not
materially understated,’ the report says.
The department is set to be grilled by MPs on the Public Accounts Committee
on 2 May over the issues.
Dominic Grieve MP, Conservative shadow attorney general, said: ‘Given this is
the office which is responsible for bringing prosecutions against those who
break tax and customs law it is particularly troubling.’
The report makes clear that the department has made moves to sort out the
problems, establishing an internal audit function, improving month-end
processes, and has a new system for processing lawyers’ fees, which Sir John
said ‘should improve the department’s ability to manage this key element of its
Read the report at www.nao.org.uk
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