HMRC chief executive Jon Thompson has acknowledged that the inclusion of information about Lycamobile’s political donations in an email to the French authorities was “a mistake” but insisted that it had no impact on the decision to reject the requests from French authorities for a raid on the firm’s UK business.
Officials at HMRC last year rebuffed a request from French authorities to assist an investigation into telecoms giant Lycamobile over its financial activities.
The refusal noted that the firm was the “biggest corporate donor to the Conservative party led by prime minister Theresa May and donated 1.25m Euros to the Prince Charles Trust in 2012", according to BuzzFeed News.
The letter from HMRC also noted that Lycamobile was a huge company with “large assets at their disposal” and would be unlikely to agree to a raid and might respond with a legal challenge.
Following the disclosure, Labour’s shadow chancellor John McDonnell said the row raised questions over the independence of HMRC, while Nicky Morgan, the Conservative chair of the Treasury Select Committee, wrote to Thompson to express concerns.
In his reply to Morgan, Thompson said that it was “absolutely clear that the decision not to execute the French request for a search warrant was taken entirely on the grounds that there was insufficient information provided to meet the statutory criteria for a UK search warrant”.
The inclusion of what he called “general information about Lycamobile” was intended to provide background information to the French authorities, he said, “but was irrelevant to the decision we had taken and had no effect on that decision”.
He added: “It was a mistake to include the background information in the email, as it created an opportunity for others to misconstrue the reasons and motivations for our decision”.
Thompson insisted that HMRC is committed to helping overseas partners and strives to carry out any requests for investigatory assistance as far as possible. However, they can only take action where the request meets the standards of UK law, and where it does not, works to help other countries reach that level.
“In the case of Lycamobile, we did just that – working with the French authorities over a period of several weeks to help them understand the extent of the information that they would need to supply as part of any application for a UK search warrant.”
Thompson added that an internal investigation into the Lycamobile case by a senior HMRC lawyer – who is outside the team that dealt with the MLA request in question – found no suggestion that the background information influenced decision-making in the case.
“On the contrary, it is clear that HMRC made a concerted effort to assist the French to succeed with their request,” he added. “That internal investigation will look into the processes in place to deal with requests... to make sure that we avoid this kind of concern arising in future.”
Responding to Thompson’s letter, Morgan said she will ask HMRC to provide a reassurance that similar mistakes have not been made in response to other such requests from overseas authorities.
“As part of the committee’s inquiry into economic crime, and the sub-committee’s inquiry into tax avoidance and evasion, we will examine HMRC’s conduct in pursuing investigations into money laundering and tax fraud," she said.