HC 1371 Treasury CommitteeLetter from the Permanent Secretary for Tax, HMRC, to the Chairman of the Committee

Thank you for your letter dated 20 October and for the opportunity to clarify the statements I made at the Treasury Sub-Committee (TSC) on 12 September and the Public Accounts Committee (PAC) on 12 October about my relationship to Goldman Sachs.

It may help if I first outline how the department engages with its large business customers on a day to day basis.

Each of the largest businesses with which HMRC deals is allocated a Customer Relationship Manager (CRM), who sits within the department’s Large Business Service (LBS). The CRM is responsible for managing the overall relationship with the customer and all aspects of the customer’s tax affairs. Goldman Sachs is no exception. The CRM is a qualified and experienced tax specialist and, for very large businesses such as Goldman Sachs, a member of the Senior Civil Service. The CRM will manage the work of a team of more junior tax specialists and commission work from other experts across the department as necessary. The CRM will report to a Sector Lead, who will have an overview of all large businesses in a sector (such as banking). It is the CRM and his or her team (under the supervision of the Sector Lead) who will deal with a large business customer’s tax affairs.

As Permanent Secretary for Tax, I am the Head of the Tax Profession in HMRC and the department’s most senior tax professional. In that capacity I am accountable to the Chief Executive, amongst other things, for building tax professional capability within the department, supporting an effective policy partnership with the Treasury, engagement with international, City and major business stakeholders on tax matters and for oversight of the largest and most complex tax settlements and issues in HMRC. In this capacity I am called upon to advise and support colleagues in their handling of a range of tax matters. The meeting on 19 November 2010 with Goldman Sachs was an example of this. However, I do not deal with the tax affairs of any HMRC customer on an ongoing or day to day basis.

When asked by Mr Norman at the TSC on 12 September whether any dispute with Goldman Sachs was outstanding when I spoke at an event at Goldman’s on 19 May 2009, I explained that “I knew nothing of Goldman’s tax affairs” at that time—and I did not. That was because the Goldman Sachs CRM and others in HMRC deal with Goldman’s tax affairs, not me and it was why I said that “I do not deal with Goldman’s tax affairs”. In retrospect, I recognise that a fuller response would have been to say that I do not deal with Goldman’s tax affairs “on a day to day basis”.

I attempted to clarify the apparent ambiguity when asked by the PAC on 12 October. In retrospect, I ought also to have written to the TSC and I apologise for not having done so.

Dave Hartnett CB
Permanent Secretary for Tax

31 October 2011