HMRC's Jon Thompson to lead beefed-up new audit regulator
HMRC’s chief executive Sir Jon Thompson will quit his post in the Autumn to take the lead at the Audit, Reporting and Governance Authority, the new accounting regulator replacing the beleaguered FRC.
Thompson has been at the tax authority for three years. In his new role at the Financial Reporting Council (FRC), and eventually the Audit, Reporting and Governance Authority (ARGA), he takes over from Stephen Haddrill who has been the FRC’s chief executive for the past decade.
In a statement, Thompson said the decision to leave was a tough one, but that “the opportunity to lead the Financial Reporting council as it turns into the ARGA, and to promote public trust in doing business in the UK at a point when we’re about to forge new alliances across the world, is too exciting to turn down”.
An eventful tenure
Thompson’s time at HMRC has been eventful, with preparations for MTD and Brexit taking place under his watch. His tenure has also delivered substantial increases in tax revenue collection and a narrowing of the tax gap.
But there’ve been plenty of bumps, too. Thompson’s direct approach on matters related to Brexit earned him the ire of some Leave supporters (and even death threats). Thompson made waves by saying the post-EU customs option preferred by Brexiters would cost up to £20bn.
MTD has been another sore spot. The rollout for the government’s ambitious tax digitalisation plans has been troubled (as extensively chronicled on AccountingWEB). MTD for VAT, however, did get going under Thompson’s care.
HMRC’s record yields, some critics would say, is as a result of the tax authority’s ruthless pursuit of taxpayers. The loan charge, in particular, has been a contentious episode during Thompson’s tenure as HMRC has remained unmoved on the matter.
Praise and criticism
Despite these issues, Thompson’s resignation from HMRC has elicited widespread praise for the career civil servant. In a statement, Michael Izza, chief executive of the ICAEW, praised Thompson as “an excellent choice”.
He added, “I have no doubt he will deliver on the vision of Sir John Kingman's Review for a strong and credible new regulator.”
Among AccountingWEB readers, though, Thompson has received substantial criticism. His knighthood at the start of the year prompted G Webber CTA to write: “If the award was for creating an organisation with no empathy, a predilection for manipulating statistics to suit, a policy of ignoring inconvenient Judicial decisions and one in which staff are relentlessly bullied and discriminated against, then arise Sir Jon.”
Out of the frying pan...
Reacting to the news, a number of industry insiders have noted that for Thompson it may well be a case of out of the frying pan into the fire.
ARGA’s creation has been necessitated by years of dysfunction at the FRC. Sir John Kingman, who led a review into the FRC, labelled the regulator “a rather ramshackle house cobbled together with all sorts of extensions over time.
“The house is just serviceable up to a point but it leaks and creaks sometimes badly. The inhabitants in the house sort of patch and mend but in the end, the house is built on weak foundations and we need to build a new house.”
The new house in Kingman’s extended metaphor is ARGA, and once the transition from the FRC occurs Thompson will be charged with wielding the new body’s more muscular powers. This includes the ability to make direct changes to accounts rather than having to apply to a court to do so.
ARGA will also be able to investigate company directors, something the FRC can only do at present if the directors are also registered with an accounting body.
There will be plenty of interested critics waiting to see how judiciously Thompson’s ARGA exercises these new powers. For this new task, Thompson will receive £330,000 a year -- substantially less than the £423,691 Stephen Haddrill earned in the last financial year.