Incoming FCA chairman admits “error of judgement” over film scheme

Incoming Financial Conduct Authority (FCA) chairman Charles Randell has been given the green light to assume his role at the regulator.

Incoming FCA chairman admits “error of judgement” over film scheme

The Treasury Committee approved Randell’s appointment, a former lawyer with Slaughter & May despite his admission of an “error of judgement” in investing in film scheme Ingenious Film Partners 2 LLP, having been satisfied there are “no further aspects of his personal tax affairs that might cast his judgment into further question”. Randell paid back approximately £114,000 to HMRC after the scheme was challenged by the tax authority.

Ingenious Film Partners 2 sought to use artificial losses arising from investments in a range of movies, including the blockbusters Avatar, Life of Pi and Die Hard 4, to claim tax relief. Ingenious Media, which runs the scheme, has always maintained the vehicle is legitimate and confirmed it is appealing to the upper tribunal.

In a letter to Treasury permanent secretary Tom Scholar, Randell said his involvement in the scheme between 2006 and 2011 was “an error of judgment which I regretted”.

He wrote: “I informed the panel that I had invested in a film production partnership promoted by my financial adviser in 2006, and that despite assurances from my adviser and the managers of the partnership that HMRC were content with the partnership arrangements, HMRC subsequently opened an inquiry into the partnership tax affairs. I also explained that I had fully settled my tax affairs in relation to the partnership, by repaying as requested by HMRC an amount of tax relief originally granted by them. I also confirmed that I had withdrawn from the partnership.”

Treasury Select Committee chairwoman Nicky Morgan MP said: “Mr Randell acknowledged that he had made an error of judgement by participating in the scheme. We received an assurance from him that there are no other aspects of his personal tax affairs that might cast his judgement into further question.

“As the report states, the Committee was satisfied that Mr Randell has the professional competence and personal independence to be chair of the FCA and the PSR.”

Correspondence between the Treasury and Randell can be found here.