Welcome to Britain, a haven for tax dodgers | Nick Cohen

The HM Revenue & Customs chief seems to think it's OK for financial big boys to skip paying their dues

If the British think about their tax collectors with anything other than resentment, they imagine them to be a tedious collection of men and women. Hearing of Dave Hartnett, Her Majesty's permanent secretary for tax, they might picture a fastidious and humourless bureaucrat returning every day to a home counties commuter town.

He would kiss his wife, but not too passionately, engage in an appropriate hobby for a Revenue officer – building a model railway, maintaining the herbaceous border – have one glass of wine with his dinner and go to bed. Newsnight would provide the greatest excitement in his life.

Dave Hartnett's ominous achievement is to make the Revenue interesting. The record of his socialising with the City institutions he is meant to tax is exhausting in itself. Lunch at BDO Stoy Hayward; drinks reception at Deloitte; dinner at KPMG; a spot of breakfast at JP Morgan Cazenove; followed by yet more backslapping and hail-fellow-well-metting through 107 City breakfasts, lunches and dinners in the space of two years.

The best that MPs on the Commons Public Accounts Committee can say is that they do not believe that Hartnett is corrupt. They have accused him of "lying" to Parliament and "ripping off" the taxpayer. They have told him that he has given probably the most rapacious and unscrupulous investment bank on the planet a sweetheart deal the Revenue would never grant to "a small business that is hounded and punished for interest payments", and dismissed his explanations as "laughable". But they do not believe he is on the take.

They believe he is suffering from delusions of grandeur.

Go back before the crash of 2008 and remind yourself how politicians, bureaucrats and journalists treated high finance. Not one of the media organisations that covered business – not the Wall Street Journal, Bloomberg News, the Economist, Forbes, Fortune or the Financial Times – warned of the coming crisis or campaigned to reform banking before it was too late.

A couple of columnists, most notably Allan Sloan of Fortune and Gillian Tett of the FT, served their readers well, but their editors and colleagues stayed silent when speaking out might have made a difference. Meanwhile, a Labour government, nominally committed to defending the many, not the few, knighted dangerous men who were leading their banks to ruin – Fred Goodwin at RBS and James Crosby at HBOS – and somehow found a way to turn Alan Greenspan, who had pumped up the greatest bubble in the history of capitalism, into "Sir" Alan Greenspan, even though as an American citizen he made an unlikely knight of the realm. Meanwhile, regulators in Britain, America and beyond did not produce one worthwhile investigation or seek to do their duty and protect their countries.

In all the explanations for the failure of the watchdogs of democratic societies, one should not underestimate the seductions of power-worship. Confronted with financiers who appeared to have mastered the mysteries of globalisation, regulators wanted to be their friends and hoped that the princes of the investment banks would treat them as their equals, if only for a while. The trouble with Hartnett is that, despite all we have been through, he still does.

If he were a politician, the press and the opposition would have forced him to resign by now for the favours he gave Goldman Sachs. The Revenue had been fighting for five years to retrieve tax and national insurance Goldman owed on the salaries and bonuses of its bankers it had paid into accounts in the British Virgin Islands. Other companies that tried the same trick accepted they had broken the law and paid the appropriate back tax and penalties. Goldman stalled for years and disputed "every conceivable point". If you, dear reader, did the same, the Revenue would fine you and imprison you if you refused to comply.

But Hartnett could not have been friendlier to Goldman. He proved that he, a humble official of HM Revenue & Customs, could still be "a player" – the go-to guy who could cut a deal with the big boys – by overriding his underlings. He called in a Goldman's exec from New York and allowed the bank to escape interest payments and penalties worth millions in return for paying the back tax.

The British remain reasonably honest. I am not saying that there is not widespread fraud across all social classes, rather that most people accept that they should pay their taxes and assume that the administration of the tax system is fair. If the notion takes hold that there is one tax law for the rich and another for everyone else, the effects on the national culture will be profound.

In Boomerang, his account of how the crisis has hit Europe, the great American financial journalist Michael Lewis makes an essential point about corruption.

Societies where confidence in the integrity of public life collapses aren't charming countries filled with lovable rogues and blushing couples looking forward to their big fat Greek weddings. They are suspicious, small-minded and mean. "The hardest thing to do in Greece is to get one Greek to compliment another," he writes.

"No success of any kind is regarded without suspicion. Everyone is pretty sure everyone is cheating on his taxes, or bribing politicians, or taking bribes or lying about the value of his real estate. And this total absence of faith in one another is self-reinforcing. The epidemic of lying and cheating and stealing makes any kind of civic life impossible; the collapse of civic life only encourages more lying, cheating and stealing."

For all the demonstrators in Athens saying that their sufferings are the fault of the rich, no one can blame the Greek crisis on the banks. It is the fault of a corrupt society and of a European Union and local politicians, who tied Greece into the straitjacket of the euro, which has left it with no means of breaking out of debt and recession.

There is an exception to the rule, however. One investment bank helped Greece hide the true extent of its deficit from the European authorities by arranging currency swaps, which, staggeringly, appear to be legal. Greece could then pretend that its debt was not debt at all and mask the full extent of its liabilities. The bank was Goldman Sachs, which received $300m in fees. This is the same bank Her Majesty's permanent secretary for tax excuses from the tax demands the rest of us must meet, as he strives to Hellenise the British and turn this country into Greece without the sunshine.


Nick Cohen

The GuardianTramp

Related Content

Catherine Bennett: Want to hurt Sir Fred? Well, take away that knighthood

Catherine Bennett: It's not realistic or effective to seize the disgraced banker's pension. But his title is quite another matter

Catherine Bennett

08, Mar, 2009 @12:01 AM

Article image
Golden years on the golf course? We should be so lucky…
Royal Bank of Scotland directors, led by Fred Goodwin, will not face prosecution, but millions of Scots face serious pensions shortfalls

Kevin McKenna

14, May, 2016 @5:30 PM

Article image
Fred Goodwin's evisceration is so predictable | Kevin McKenna
Kevin McKenna: We Scots have a sorry tendency to turn on those whom we once happily cheered along

Kevin McKenna

05, Feb, 2012 @12:03 AM

Article image
The real cultists are not Maoists, they're CEOs | Nick Cohen
Nick Cohen: It is not only in religious or political circumstances where people are made to follow a leader unthinkingly

Nick Cohen

30, Nov, 2013 @6:04 PM

Article image
US banks named as being among least ethical UK operators
A new study scores the best and the worst accounts based on key issues such as climate and tax avoidance

Shane Hickey

12, Dec, 2022 @9:00 AM

Article image
Barclays: the eagle that learned how to fly higher than the rest
While others struggled in the crunch, an ordinary British bank became a Wall Street powerhouse. Now it has a controversial boss to match

Richard Wachman

11, Sep, 2010 @11:03 PM

Article image
High-frequency trading – enough to get Goldman Sachs preaching financial probity
Jamie Doward: Even as bestselling author Michael Lewis warns against it, the City is abuzz with new ways to trade faster and make more money

Jamie Doward

29, Mar, 2014 @8:00 PM

Article image
Royal Mail privatisation: bankers to face select committee
Advisers from Goldman Sachs and UBS will appear before MPs as concern grows over IPO valuation, writes Sean Farrell

Sean Farrell

17, Nov, 2013 @12:05 AM

Article image
Instead of draining the swamp, Trump has become Wall Street’s best buddy | Will Hutton
The president promised a radical overhaul of banking, but is encouraging the money men’s worst excesses

Will Hutton

12, Feb, 2017 @12:06 AM

Article image
To stop firms gaming the tax system, make them admit what they're doing
Business leader: There is nothing illegal about deferring bonuses to the next tax year. But there is quite a lot of shame in having to announce the fact publicly to one's struggling customer base

27, Jan, 2013 @12:06 AM