20 Feb 2018
Lawmakers have questioned the appointment of the incoming chairman of regulator the Financial Conduct Authority (FCA) following revelations that he was a member of a controversial tax avoidance operation.
Charles Randell signed up with Ingenious Media Film 2 film production company, in which investors could claim tax breaks against film production losses.
Investors in the scheme, who included celebrities and sports personalities, later landed in trouble with HMRC after it was deemed to be a tax dodging operation.
In 2016 HMRC announced that it had won ‘major tax avoidance battles’ against the Ingenious Film Partnership and Icebreaker avoidance schemes ‘in cases worth more than £820 million in tax owed and interest.’
Letters published on Tuesday by the parliamentary Treasury Select Committee show that in January this year, Nicky Morgan, Treasury Select Committee chair, wrote about Randell’s involvement with Ingenious to the Treasury department, which appointed him as the new FCA chair.
“I would be grateful to know, by 26 January, if the members of the assessment panel were aware of this, and if so, what bearing, if any, it had on their decision-making,” she said.
Tom Scholar, the Treasury’s permanent secretary, replied that Randell had disclosed his involvement to the panel at his interview for the roles, however the panel was ‘content’ that he had had taken appropriate action, and it should not prevent him from being appointed to the roles of chair of the FCA and PSR (Payment Systems Regulator).
Randell also wrote to Scholar in January about the matter, explaining that: “I had invested in a film production partnership promoted by my financial adviser in 2006, and that despite assurances from my adviser and the managers of the partnership that HMRC were content with the partnership arrangements, HMRC subsequently opened an inquiry into the partnership tax affairs.”
“The amount repaid to HMRC, which was not discussed at the interview, was approximately £114,000 plus interest. Finally, I told the panel that I considered that my decision to invest in this partnership was an error of judgment which I regretted.
“I did not elaborate on this at the interview but I regret failing to independently investigate the assurances I received that HMRC were content with the partnership arrangements.”
Randell was appointed FCA chair last month, and is set to begin the five-year term in April this year.
He is a member of the Prudential Regulation Committee of the Bank of England and chair of the Audit and Risk Assurance Committee at the Department for Business.
He previously worked at Slaughter and May between 1980 to 2013, becoming a partner in 1989.
A Treasury spokesperson said: “Charles Randell has extensive experience in UK financial services regulation and his appointment was made on the basis of merit following a fair and impartial recruitment process.”
– Irene Madongo
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