Red faces at Serious Fraud Office over taxman’s fine
The Serious Fraud Office underpayed its VAT bill by more than £3 million
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Tuesday 01 July 2014
The cash-strapped Serious Fraud Office has been forced to pay the taxman a fine of more than £500,000 after underpaying its VAT bill by more than £3m.
Accounts for the organisation more used to investigating financial wrongdoing than committing it showed last night it had been reclaiming VAT on payments it made for barristers’ fees and other specialist contract staff.
But the new chief financial officer, Barny Todd, realised this was wrong and “self-reported” the SFO to HMRC. As a result, the taxman slapped a £564,000 penalty on the organisation and calculated that, including fines, interest and accrued tax, it now owed £4.6m from the error.
That represented nearly 10 per cent of the organisation’s entire £51m spend for the year to 31 March.
The SFO successfully negotiated a £19m increase in its budget for the year from the Treasury in February, partly to reflect its tax mess-up but also to cater for big legal bills prosecuting or investigating cases such as Libor and Barclays’ Qatar fundraising.
The ongoing fiasco surrounding its botched investigation into the Tchenguiz brothers also featured highly.
Accounts released yesterday showed it actually underspent on its budget by £4.2m due in part to one of its key cases progressing slower than anticipated. Those costs will probably be incurred in the current financial year instead.
Cases ongoing include Libor, Barclays-Qatar and the multiple ENRC alleged wrongdoings as well as G4S and Serco’s prisoner-tagging affair.
The SFO comes under regular attack for being outwitted by white-collar criminals and for failing to bring prosecutions. Under director David Green, it has tried to focus more on fewer, bigger cases. The accounts highlight how low the pay is for SFO top brass, even compared with those in the lower ranks of the City law firms they are up against when running their investigations.
The SFO’s chief investigations officer was paid a package of about £100,000, while its senior case handlers are paid £62,000 to £73,000.
Law firm Slaughter & May pays newly qualified lawyers a starting salary of £63,000. Three years after qualifying, lawyers at Clifford Chance are paid nearly £95,000.
Mr Green was paid £205,000-£210,000, including pension contributions.
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