The taxman must account

The Guardian:

On Tuesday the Guardian published a memo of a meeting at HM Revenue & Customs suggesting that Dave Hartnett, its top tax official, had “shaken hands” with executives at Goldman Sachs over a longstanding tax dispute. The memo made clear that the Revenue’s lawyers had little information about the deal and were ignorant of crucial details, such as the actual principal amount owing and whether interest had been charged. It has been speculated that as much as £10m was not collected as a result.

The lawyers were evidently deeply uncomfortable about the settlement, which Hartnett has since described as “a mistake”. It was pointed out that Goldman had aggressively resisted the claim for five years, “raking [up] every conceivable point in the tribunal … and putting up a stooge witness” rather than Mike Housden, the executive responsible. The settlement imposed no penalty for this obstructionism and delay. At the meeting Anthony Inglese, HMRC’s general counsel, went so far as to say that he “would always want to assist Dave Hartnett, but not if this were ‘unconscionable’.” This seems to imply he felt the Goldman settlement was close to being unconscionable.

A further HMRC memo, from Treasury counsel James Eadie QC, concerned public disclosure. It reaffirmed HMRC’s policy of not revealing tax information except where strictly necessary, pointing out that wrongful disclosure is a criminal offence. But it also made clear that HMRC could disclose information to parliamentary bodies with an oversight role, such as the public accounts committee. The official responsible for deciding whether and what to disclose was Hartnett.

So far, so complex. But here’s the point: in a Treasury committee hearing on 12 September, I had cross-examined Hartnett in relation to the Goldman case. He said, in terms: “I do not deal with Goldman’s tax affairs.” When I had pushed him he had refused to discuss any aspect of the case or the department’s handling of it, citing legal advice.

These remarks seem to be contradicted by the memos. Hartnett did deal with Goldman’s tax affairs, and could in my view discuss aspects of this case, because the Treasury committee exercises an oversight function over the Treasury, of which HMRC is part. What he said in parliament appears contradictory, because he himself had gone into some detail with me in earlier testimony over a tax claim against Vodafone.