Dave Hartnett admitted excusing US bank from £10m in interest charges was 'mistake', but leaves with £1.7m pension pot

This article is more than 8 years old

This article is more than 8 years old

The head of Revenue & Customs is to retire in the wake of revelations about his organisation's decisions to waive millions of pounds owed by corporations.

Dave Hartnett, 60, will step down as the permanent secretary for tax next summer, a spokesman said . He will leave with a pension pot worth £1.7m.

Hartnett has admitted that his organisation made "a mistake" when he shook hands on a deal to excuse the US bank Goldman Sachs from paying around £10m in interest charges. His organisation has also been accused of allowing Vodafone off interest charges of more than £1bn.

His announcement came hours after the Guardian disclosed that Revenue & Customs is investigating the whistleblower who uncovered the Goldman Sachs deal and Hartnett's role in it.

Senior MPs are angry that Osita Mba, a solicitor who used the Public Interest Disclosure Act to tell the National Audit Office and two parliamentary committees about the deal, could face the sack or criminal prosecution.

Hartnett's decision to retire came in a press release announcing a new chief executive, Lin Homer, for the Revenue. A spokesman for the Revenue said Hartnett had decided to retire some weeks ago and that permanent secretaries can retire from 60.

An HMRC spokesman said: "He's going to stay on until Lin [Homer] gets to grips with the department, when he will be well over 61.

"It was entirely his decision ... he's not been pushed or encouraged. His chair has not been moved closer to the door."

However, on 7 November, Hartnett told a parliamentary committee examining the Goldman Sachs and Vodafone deals that he had no plans to stand down.

Margaret Hodge, chair of the public accounts committee, asked Hartnett if he had considered his position. He replied: "I have work to do and I have no plans to resign."

His decision to retire will not change the Revenue's decision to pursue Mba, possibly through the courts, the spokesman added.

Hartnett's package will anger critics. At the most recent valuation, in March 2011, his pension pot was worth £1.7m. He is expected to receive an annual payout of up to £80,000 and a lump sum on retirement of one year's salary, which is recorded as £160-165,000.

In September 2010, Hartnett was criticised for refusing to apologise for the scandal that saw millions of people asked for backdated tax after his department failed to collect tax correctly. He told BBC Radio 4: "I'm not sure a need to apologise ... We didn't get it wrong." He later issued an unreserved apology.

His department is expected to be severely criticised in a public accounts committee report to be released before Christmas. The National Audit Office is trying to appoint a judge to investigate at least four corporate tax deals signed off by Hartnett, the Guardian understands.

Hodge, who has been one of his fiercest critics, welcomed Hartnett's decision but said the Revenue needed to move on by making root and branch changes.

She said: "Dave Hartnett has given many years of public service and I wish him well, but it is time for a change at the top of the HMRC. Our inquiry uncovered systemic issues, which I hope the organisation will set about tackling urgently."

She also called for the inquiry into Mba to be dropped.

"I hope the fact that we have published Mr Mba's name will now give him proper protection through whistleblower legislation and that the new management will drop any case against him," she said.

Richard Bacon, the Conservative MP and public accounts committee member, described Hartnett's resignation as a "very English solution".

Bacon added that following the Guardian's report on Thursday, Hartnett may have thought that "the game's not worth the candle" and decided to retire.