NEW FINANCIAL WATCHDOG IS A TAX AVOIDER

Regulator had to pay £114,000 back to HMRC He told Treasury but they STILL appointed him

THE man appointed to police Britain’s financial system yesterday admitted using a notorious scheme that helped cut tax bills.

Charles Randell was given the job despite admitting in his Treasury interview that he had been made to pay back £114,000 to the taxman, plus interest.

The scheme he used, Ingenious Film Partners 2, collapsed after an investigation by HMRC.

Grilled by MPs yesterday, the 59- year- old corporate lawyer accepted he had made a mistake.

Campaigners said Mr Randell’s appointment as the next chairman of the Financial Conduct Authority amounted to ‘self-policing by the financial elite’ – and should be blocked.

Nikki Turner, of the SME Alliance for bank fraud victims, said: ‘If you or I were to try to dodge our taxes for thousands of pounds, sorry wouldn’t be good enough.

‘We need somebody in the post who’s open to seriously trying to

resolve the problems with the financial sector.’ Robert Palmer, of Tax Justice UK, added: ‘Charles Randell appears to be someone who is willing to play the system to make himself richer.

‘It can be really tough for someone like that to crack down on abusive banks. This is self-policing by the financial elite.’

The chairman of the FCA is one of the most senior figures in the City.

The role involves overseeing the staff of the regulator, which investigates bad behaviour by thousands of financial institutions, and ensures customers of big firms are treated fairly.

Mr Randell made his name at ‘magic circle’ law firm Slaughter and May as the Government’s top legal adviser on bank rescues during the financial crisis, reportedly earning fees of £500 an hour. It is thought his firm earned as much as £33million.

The Ingenious Film Partners 2 scheme was set up to take advantage of tax breaks for the British film industry. Around 1,400 people invested, lured by the promise of savings on their tax bills.

Mr Randell, who takes over at the FCA in April, was listed as a partner of the scheme between 2006 and 2011.

In 2013, HMRC sent out letters to investors telling them that a crackdown on these schemes was coming.

A tribunal last year ruled that – while it considered the film partnership scheme was legitimately trading with a view to profit investors in the scheme – it owed the Revenue around £700million for deductions made that were not allowable.

Mr Randell was selected as next chairman of the FCA by the Treasury in January, replacing outgoing boss John Griffith-Jones, himself a controversial figure for his past career at accountant KPMG. The appointment was approved by Chancellor Philip Hammond.

However, yesterday as Mr Randell faced MPs in a Treasury committee hearing probing his appointment, his involvement in the tax scheme was made public.

Asked by committee chairman Nicky Morgan if he could see that the scheme might look to ordinary people like a ‘rather clever tax wheeze’, Mr Randell said: ‘Yes I can. I need to be careful here, because anything I say will sound like an excuse, whereas I take responsibility for the decision that I took.’ However, Mr Randell said he invested in the scheme only after a financial adviser told him it was legitimate and had been approved by senior officials at HMRC.

He added that in hindsight this was clearly a mistake, saying: ‘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.’

Mr Randell said he had repaid the authorities the £114,000 plus interest which HMRC said it was owed.

He said he told headhunters about his involvement with Ingenious when first approached about the FCA job. He then raised it in his interview with the Treasury, which decided he was still the best man for the role. In a letter to Mrs Morgan, senior Treasury civil servant Sir Tom Scholar said: ‘The panel was content that Mr Randell had taken appropriate action, and concluded that this should not prevent him from being appointed.’

But Liberal Democrat leader Sir Vince Cable said: ‘This appears to be an inappropriate appointment. MPs need the power to block appointments of this nature.’

A Treasury spokesman said: ‘Mr 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.’ The FCA declined to comment.

Baroness Ros Altmann, a former Labour pensions minister, said: ‘The FCA has got to be conscious of its image, and how it’s seen to be protecting ordinary people.’