By Andrew Young-
The incoming chair of Britain’s Financial Conduct Authority has shamefully admitted an ‘error of judgement’ after investing in a tax avoidance vehicle.
Charles Randall appeared before the Treasury Committee on Tuesday afternoon, admitting making a mistake by putting money into the Ingenious Film Partners 2 scheme.
Ingenious Film Partners 2 was a film production partnership popular with many celebrities and sports stars like David Beckham and Wayne Rooney. It used tax breaks designed to encourage films to be made in the UK. Those who put money into the scheme could claim tax relief against film production losses.
Randall has admitted failing to sufficiently investigate the situation, but ne can be forgiven for concluding he did this deliberately. He said his financial adviser that HMRC had said the scheme was acceptable, but HMRC has not independently confirmed this. Randall invested in the scheme between 2006 and 2011.
He told the committee that it was an “error of judgement” not to investigate these assurances. He added:
I take responsibility for the decision that I took.
I was reassured to hear that this partnership had been discussed with senior policy officials at HMRC who had indicated that they approved of it.
It’s 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 been telling me that this was an investment for which there wasn’t a specific statutory framework. There wasn’t a binding approval mechanism.
And if HMRC did approve it in 2005, which I’ve been told repeatedly is the case, then it was always open to them to change their mind – which they obviously did do.