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Good-Knight? HMRC’s CEO Thompson to Leave as Problems Mount

Author

Andy Wood

Andy is a practical, creative tax adviser who assists a variety of clients in achieving their personal and commercial objectives in the most tax efficient manner.

Is there ever, I wonder, a good time to say goodbye?

It’s something which I’ve found myself reflecting on having learned that HMRC’s Chief Executive, Sir Jonathan Thompson, has announced his decision to leave later this year in order to take up an equivalent post at the Financial Reporting Council.

Leading the Revenue for more than three years, said Mr Thompson, who was knighted in the New Year’s Honours list, had been “a tremendous privilege”. “To leave now”, he added, “has not been an easy decision for me to make”.

Nevertheless – and without wishing to be unfairly critical in any way – I wonder if his opting to switch from the HMRC hot seat into the rather less stressful environs of the FRC is perhaps rather timely.

Consider, for instance, the fact that Sir Jonathan’s exit was announced on the same day as the Revenue’s latest annual report was released.

HMRC’s Annual Report Released

The fact that the document only merited a mention two-thirds of the way down the press release disclosing his change of job begs the question about whether HMRC was following the advice of the former Whitehall spin doctor Jo Moore about burying bad news.

Looking at its contents in more detail, one can see how a sceptic could come to that conclusion. The fabled ‘tax gap’ – the difference between expected tax and the amount actually received by the Treasury which has become something of a fixation at Revenue HQ – has crept up.

More specific figures appear to show that HMRC’s performance has slipped markedly in the space of the last year with the sums owed by the business community and individuals all increasing.

The language adopted by the Revenue in reference to the tax gap position is intriguing too. Gone is the tough talk about its ability to “maximise revenues due and bear down on avoidance and evasion”. In its place, comes a description of how “the tax affairs of individuals and businesses continue to become more complex”.

I wonder whether another of the significant challenges facing Sir Jonathan and his colleagues might be partially to blame. After all, the very communique which announced his departure told of how

“around 5,400 full-time equivalent employees are working on EU exit, building the customs, VAT and excise systems the UK will need and preparing our customers for leaving the EU, with or without a deal”.

The Clock is Ticking…

With the clock ticking towards the current 31st of October deadline to complete a negotiated withdrawal, it surely can’t have helped to have Karen Wheeler, the Revenue official in charge of trying to put in place post-Brexit “frictionless” borders, quit last month.

The Treasury press release did, of course, note Sir Jonathan’s contribution to tackling bullying in the workplace. Whether that was before or solely in response to an independent report published this February uncovered “abusive and abrasive” behaviour is a moot point.

Of course, complaints that taxpayers and not colleagues were left bruised had been made by a House of Lords’ committee in December. It argued that the creeping extension of HMRC’s powers had upset the balance “between clamping down and treating taxpayers fairly” and amounted, in part, to “a tax on justice”.

If all that and the regular critical interrogations to which Sir Jonathan was subjected to by MPs sitting on the Commons’ Public Accounts Committee wasn’t enough to have him throwing in the towel, he might have regarded relations with multi-national giants of the internet as reason enough to give up.

On the one hand, he and his Revenue colleagues were charged with the task of clamping down on alleged VAT fraud by firms trading on eBay and Amazon.

Indeed, just two months after Sir Jonathan took up the reins at HMRC, he had Theresa May, no less, insisting that it didn’t

“matter to me whether you’re Amazon, Google or Starbucks, you have a duty to put something back. You have a responsibility to pay your taxes”.

Fast forward to the revelation only days after it emerged Sir Jonathan was to leave that Amazon’s web services division had landed £22.2 million worth of contracts from…HMRC.

I’m not suggesting that Sir Jonathan – who, despite becoming something of a bête noire for those affected by the loan charge, is a seemingly well-liked, earnest and respected civil servant – is using his new job as simply an escape route from the flames of crisis lapping at the Revenue’s doors.

However, after three embattled years, I imagine that he would be forgiven a slightly easier life.

The issue now arises, though, of who would want to succeed him.

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