HMRC Redknapp blunder could cost £8m

The judgment of HMRC is under the spotlight after Tottenham Hotspur manager Harry Redknapp was acquitted of cheating the public revenue, along with Milan Mandaric, the ex-Portsmouth chairman.

HMRC's investigation lasted five years. It cost the taxpayer several millions. Yet HMRC remains defiant about the waste of public cash.


No regrets

"If you look at the logic of the case none of it made sense," Harry Redknapp's defence barrister John Kelsey-Fry, QC, told the Mail. "It's one of those things where if you sit down and think about it, you know there is something not right there."

It's difficult to know exactly how much the bungled HMRC allegations cost the taxpayer. The Crown Prosecution Service was involved - 'fair, fearless, effective' it claims - as was the City of London Police - and, of course, it clocked up thousands of HMRC hours. Police interviews; a dawn raid; many millions spent. But a jury threw the case out in just five hours.
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What is breathtaking is that HMRC had no regrets about taking on Redknapp, whose own legal fees for the case have tipped £500,000. HMRC's Assistant Director of Criminal Investigations, Chris Martin, said it was "vitally important" that the facts of the case were presented to a public jury.


No arrests

"We accept the verdict of the jury but I would like to remind those who are evading tax by using offshore tax havens that it always makes sense to come forward and talk to us before we come to talk to you."

The FT claims HMRC has been given £900m to look more closely at tax avoidance and to step up the number of prosecutions, though clearly it will need to pick with more care in future, especially if targets are high profile.

The City of London Police haven't, like HMRC, come out of this covered in much glory either. Despite a massive global banking seizure, the City of London police have yet to arrest one single banker for any offence. Yet much of the credit crisis deal-making was done in the City of London, right in its own backyard.

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HMRC Redknapp blunder could cost £8m

Most recently HM Revenue & Customs let Vodafone off the hook - for quite a sum. Vodafone paid out just £1.25 billion despite an original tax bill being closer to £8 billion (HMRC has always refused to reveal how much it thought the Vodafone final bill was). The episode was made even more shaming and painful because Vodafone was given several years to come good with the cash owed - even though it was sitting on a substantial cash pile at the time.

The Exchequer is estimated to have lost around £10 million to Goldman Sachs recently through an 'error' made by HMRC. The episode relates to an employee benefit trust run by Goldman allowing employees to take non-repayable loans that had no National Insurance contributions tied to them. HMRC did claw back the full amount from more than 20 businesses - but not Goldman. HMRC remains cagey about the details of the deal. Little HMRC accountability or transparency.

Huge problems with QinetiQ, the former Defence Evaluation and Research Agency, or DERA. A lack of clarity on contractual arrangements at the outset didn't help, allowing private equity company Carlyle to hammer the price down (why would you start negotiations when you didn't know the company's true value?). The Ministry of Defence behaved, it was said, like "an innocent at a table of card-sharps". Estimated cost to the taxpayer - £90 million. Huge sums were later made by QinetiQ management when the company listed.

The TaxPayers' Alliances estimates £2.7bn worth of taxpayer cash was wasted with a super-expensive 'National Programme for IT in the NHS'. The Department of Health, in the end, had very little to show for it as a consequence. Another example of poor management and a seemingly ingrained inability to provide taxpayers' with value for money.


"BT is paid £9 million to implement systems at each NHS site, even though the same systems have been purchased for under £2 million by NHS organisations outside the Programme", the Commons Public Accounts Committee noted.

Contentious. The Office for National Statistics estimated this has declined 3.4% since 1997, "with inputs increasing by 38%." The Centre for Economics and Business Research estimate that this inefficiency costs the taxpayer £58.4 billion a year.

Given the above record, are there any deals that the taxpayer has actually won out on? Not many, but the one successful project was the roll out of new Jobcentre Plus offices. It came in £314 million under budget, claims the Taxpayers' Alliance. A small cheer.

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