Hartnett bows out as new CEO joins HMRC

The government today announced that Department of Transport permanent secretary Lin Homer will take over as CEO of HMRC in January, but also announced that permanent tax secretary Dave Hartnett will retire in June.

Such is Hartnett’s profile these days that his retirement will spark more interest than the appointment of a new chief executive, who expressed her pleasure that he will be staying with for another six months to assist her transition.

“Dave is widely-recognised as a tax leader at home and abroad, and has secured billions in tax for the UK that would otherwise have been lost through avoidance, evasion and fraud,” said Homer.

Hartnett has been praised by AccountingWEB members (including tax editor Rebecca Benneyworth) as someone who knows how tax works and as an “agent-friendly” HMRC executive. But he is also a figure of controversy, particularly around his role in negotiated corporate tax dispute settlements with companies such as Vodafone and Goldman Sachs.

Last month, protesters from UK Uncut were demanding his resignation, and since the PAYE coding backlog built up in 2010, numerous AccountingWEB members have called for HMRC’s top brass to go. With Dame Leslie Strathie leaving for health reasons and the 61-year-old Hartnett announcing his retirement the critics will have got what they wanted in relatively face-saving circumstances.

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Comments

You couldn't make it up...    1 thanks

Trevor Scott | | Permalink

 

Why not mention that she has a dodgy past... 

http://www.iaindale.com/posts/lin-homers-dodgy-past 

"She had, “thrown the rule book out of the window”.  

Needless to say the Election Commissioner look a pretty dim view of it all and made the famous remarks that in electoral terms Britain had become, “a banana republic”.  "

Sound as though she will fit in well at HMRC.

 

 

Time for change's picture

This should be an extremely    1 thanks

Time for change | | Permalink

smooth transition from the present incumbent to the new broom.

You'd imagine, with all this back scratching across these departments, that there is one hell of a special ointment!

Future career    1 thanks

bobhurn | | Permalink

I wonder if we will see a former senior HMRC official appear on the board of a telecommunications company or bank in the near future - I hope not.

Time for change's picture

With the standard of customer care

Time for change | | Permalink

in those places, I thought they (former senior HMRC officials) were already there!

John Stokdyk's picture

Odd coincidence - HMRC whistleblower faces discipline    2 thanks

John Stokdyk | | Permalink

Friday's announcement coincided with a couple of other interesting HMRC stories. Private Eye, which as spearheaded coverage of the Vodafone and Goldman Sachs settlements, reported last week that HMRC is to discipline the in-house lawyer who blew the whistle on the shortcuts that were made by Dave Hartnett to bring them to a swift conclusion.

According to the Daily Telegraph, Osita Mba presented evidence on Friday to the House of Commons Public Accounts Committee that highlighted "significant, inaccurate and misleading evidence" to MPs during its hearings into the big corporate tax deals, prompted by a critical NAO report in July.

Hartnett was personally involved in agreeing a deal with Goldman Sachs reportedly waived interest of "smaller than £10m" on a £30m tax bill on bankers' bonuses paid through an offshore company in the British Virgin Islands. But in his latest evidence, Mba said the interest payments amounted to around £20m and should include £10.8m of interest accrued up to October 2005; the total liability facing the bank was around £43m, not £30m.

The Lawyer, meanwhile, reports that Mba faces an internal investigation for disclosing that senior managers had let US investment bank Goldman escape tax penalties. HMRC confirmed that an inquiry is underway to establish whether leaks of internal  documents constitute "a serious breach of confidential information".

Margaret Hodge, chairman of the PAC, told The Daily Telegraph: "I wish [Hartnett] well in his retirement. I think his departure is right for the organisation. HMRC must now urgently address some of the systemic issues uncovered in our inquiry."

peterlashmar's picture

Dave Hartnett    2 thanks

peterlashmar | | Permalink

It really is extraordinary how a senior HMRC employee has managed to obtain such widespread Press coverage even if most it vilifies him. The "under the table" deals to settle enormous tax bills is certainly fully worthy of any banana republic as is the complete shambles of the PAYE code fiasco. Whilst selling the tax offices themselves to an offshore tax haven company is absolutely staggeringly inept.

It will, indeed, be interesting to see how long he stays "retired" and how long he can resist the obvious attractions of moving home nearer to Newbury and Vodaphone's enhanced tax free coffers.

I can well remember the days not very long ago when being a senior civil servant was a position of great respect!!

 

Peter Lashmar

Lashmars Tax Accountants

Tel    01590-688838

 

 

 

 

 

ShirleyM's picture

I am utterly disgusted ...    2 thanks

ShirleyM | | Permalink

 ... with the politicians, big chiefs and officials that proliferate in todays society. Honesty and integrity is seen as a mugs game nowadays, and only idiots play fair ... and pay taxes!

Maybe it is just the media making it appear more common that it is in reality, but it seems to be a regular occurence where some big chief does 'one of the boys', or his 'pal'  (or himself) a big favour at the taxpayers (mugs!) expense!

MartinLevin's picture

Another lawyer?    1 thanks

MartinLevin | | Permalink

Like so many Members of Parliament, persons who were "Legally trained" show little regard as to how wealth is made, as they have rarely done a proper day's work in their lives.

I would have to agree with you Shirley....    2 thanks

justsotax | | Permalink

unfortunately very few of the top guys (or girls) are in it for the principles they believe in....it is merely a numbers game in which the numbers (you, me and joe public) are incidental collateral damage.  This goes on whilst those at the top end simply protect their own...(dare I say in the hope of getting on the board of a large multinational company as a non exec and collecting any rewards earnt for services rendered).....We need an independence party (not to be mixed up with UK vs Euro) but simply made up of people who have actually done something with their lives other than be a politican or a politician in waiting or at least someone who remmembers what it was like to pay his/her petrol bill, food bill or own mortgage.......

You say avoidance, I say evasion ...    1 thanks

vstrad | | Permalink

“Dave is widely-recognised as a tax leader at home and abroad, and has secured billions in tax for the UK that would otherwise have been lost through avoidance, evasion and fraud,” said Horner.

I find it somewhat alarming that that the new CEO of HMRC is apparently ignorant of the difference between avoidance and evasion. Or perhaps she knows the difference and, like Gordon Brown and Dawn Primorolo, just doesn't care.

george.gill@themacds.com's picture

Hartnett the Man

george.gill@the... | | Permalink

Dave Hartnett is a tax man through and through, having entered the Inland Revenue straight from university.  Actually, he took the post before completing his PhD, though I think he got engrossed in the job and I'm not sure he ever finished his PhD.  Perhaps he'll do so now.

I have a recollection of Hatnett when he was just a junior Tax Inspector.  The original CIS 'Subby' tax deduction system was in its infancy, and subbies had to get a certificate to qualify for gross payment from the contractor.  There was a special arrangement for multiple certificates for limited companies but no such arrangement for sole traders who operated in a big way.  Hartnett was dealing with a road-surfacing contractor who, though he was one of the biggest in the country, remained sole proprietor and had not incorporated his business.  This contractor argued that incorporation was just a way of avoiding your liabilities.  He explained to Hartnett that his business couldn't operate on a single certificate.  It wasn't physically possible for him to drive round the country to every contractor's office presenting his one and only certificate for every stage payment on every job when he was operating at so many sites in far-flung places at the same time.  And the cash-flow consequences of tax deduction at source would put him out of business.  Rather than just say it was a pity but that was the way the system worked, Hartnett got on the phone to Somerset House in London, collared the senior official responsible for the system and told him it had to be changed, and changed quickly.  A system that so penalised a hard-working businessman was unacceptable.  What happened?  The contractor incorporated his business.

If Dave Hartnett takes a non-exec directorship after his retirement from public service, I won't begrudge it him.

 

 

I would begrudge it if

bobhurn | | Permalink

that non-exec position was with a company that benefitted from the "mistake or urban myth".  Whatever the reality the public perception would be quid pro quo.  It is insufficient for our tax system to be fair - it must be seen to be fair.

 

As a tax man through and through - how was the interest not charged?

Hartnett & his £1.7m Retirement Pot    1 thanks

Red1960 | | Permalink

 

I for one will not miss Hartnett especially in view of the millions that he appears to have cost taxpayers or any one of the questionable "initiatives" HMRC have undertaken during his watch. 

Odd that after his performance he should walking off with such a generous financial package paid for out of taxpayers pockets whilst the whistle blower that exposed his apparent wrongdoing, Osita Mba ,  should be facing potential criminal prosecution for acting in the public interest in properly bringing these matters forward.

I think there are many people who will believe that Hatnett's record should be opened to far greater public scrutiny whilst there remain suspicions over his role and motiviations in these shabby scandals that have cost the public so much.

 

 

Revenue chief who approved Goldman Sachs tax deal announces retirement

Dave Hartnett admitted excusing US bank from £10m in interest charges was 'mistake', but leaves with £1.7m pension pot 

 

The head of Revenue & Customs is to retire in the wake of revelations about his organisation's decisions to waive millions of pounds owed by corporations.

Dave Hartnett, 60, will step down as the permanent secretary for tax next summer, a spokesman said . He will leave with a pension pot worth £1.7m.

Hartnett has admitted that his organisation made "a mistake" when he shook hands on a deal to excuse the US bank Goldman Sachs from paying around £10m in interest charges. His organisation has also been accused of allowing Vodafone off interest charges of more than £1bn.

His announcement came hours after the Guardian disclosed that Revenue & Customs is investigating the whistleblower who uncovered the Goldman Sachs deal and Hartnett's role in it.

Senior MPs are angry that Osita Mba, a solicitor who used the Public Interest Disclosure Act to tell the National Audit Office and two parliamentary committees about the deal, could face the sack or criminal prosecution.

Hartnett's decision to retire came in a press release announcing a new chief executive, Lin Homer, for the Revenue. A spokesman for the Revenue said Hartnett had decided to retire some weeks ago and that permanent secretaries can retire from 60.

An HMRC spokesman said: "He's going to stay on until Lin [Homer] gets to grips with the department, when he will be well over 61.

"It was entirely his decision ... he's not been pushed or encouraged. His chair has not been moved closer to the door."

However, on 7 November, Hartnett told a parliamentary committee examining the Goldman Sachs and Vodafone deals that he had no plans to stand down.

Margaret Hodge, chair of the public accounts committee, asked Hartnett if he had considered his position. He replied: "I have work to do and I have no plans to resign."

His decision to retire will not change the Revenue's decision to pursue Mba, possibly through the courts, the spokesman added.

Hartnett's package will anger critics. At the most recent valuation, in March 2011, his pension pot was worth £1.7m. He is expected to receive an annual payout of up to £80,000 and a lump sum on retirement of one year's salary, which is recorded as £160-165,000.

In September 2010, Hartnett was criticised for refusing to apologise for the scandal that saw millions of people asked for backdated tax after his department failed to collect tax correctly. He told BBC Radio 4: "I'm not sure a need to apologise ... We didn't get it wrong." He later issued an unreserved apology.

His department is expected to be severely criticised in a public accounts committee report to be released before Christmas. The National Audit Office is trying to appoint a judge to investigate at least four corporate tax deals signed off by Hartnett, the Guardian understands.

Hodge, who has been one of his fiercest critics, welcomed Hartnett's decision but said the Revenue needed to move on by making root and branch changes.

She said: "Dave Hartnett has given many years of public service and I wish him well, but it is time for a change at the top of the HMRC. Our inquiry uncovered systemic issues, which I hope the organisation will set about tackling urgently."

She also called for the inquiry into Mba to be dropped.

"I hope the fact that we have published Mr Mba's name will now give him proper protection through whistleblower legislation and that the new management will drop any case against him," she said.

Richard Bacon, the Conservative MP and public accounts committee member, described Hartnett's resignation as a "very English solution".

Bacon added that following the Guardian's report on Thursday, Hartnett may have thought that "the game's not worth the candle" and decided to retire. 

 

 http://www.guardian.co.uk/politics/2011/dec/09/revenue-chief-retires-goldman-sachs