Charles Randell, a former City lawyer who has been named the incoming chairman of the UK’s Financial Conduct Authority, is in the middle of a media storm after he admitted to an “error of judgment” in 2006 when he invested in a film partnership that UK tax authorities have said was a tax-avoidance scheme.
Randell, who is due to take the top job at the FCA in April, disclosed his membership in the Ingenious Film Partners 2 LLP partnership to the assessment panel at his interview for the role, noting that he had invested on the advice of his adviser at the time, according to published reports.
Nevertheless, he added that he took “responsibility for the decision” himself, he added, and told the panel that he had withdrawn from the partnership and fully settled his tax affairs relating to it.
The error resulted in him repaying £114,000 plus interest to the taxman after HM Revenue & Customs declared that the scheme had been designed as a tax-avoidance product rather than an investment vehicle designed to make money for investors by financing films, according to media reports today.
Ingenious Film Partners 2 was a film production partnership that attracted a number of celebrity and sports star investors, reportedly including Steven Gerrard, Ryan Giggs and David Beckham.
Like similar schemes found by HMRC to be tax avoidance vehicles rather than investment products, the partnership used tax breaks designed to encourage films to be made in the UK. This meant that investors in the scheme could claim tax relief against any film production losses.
However, in 2016, a tax tribunal ruled that although the scheme in which Randell had invested could claim for tax relief, it could only do so “at much lower rates than those promoted”, according to the Financial Times‘s report on the matter today.
A Treasury spokesman said: “Charles 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.”