The Ministry of Defence's permanent secretary Jon Thompson is to succeed Lin Homer as chief executive of HM Revenue and Customs, it has been announced, as the tax authority's second perm sec Edward Troup moves up to the new role of executive chair.
Thompson, who has served as MoD perm sec since September 2012, will take up post as HMRC chief exec "shortly", a statement from the tax authority said, while Troup – currently HMRC's tax assurance commissioner – will start his new role on April 5.
In what appears to be a significant shake-up of the HMRC leadership structure, Troup will chair HMRC's board, while Thompson will chair the board's executive committee and serve as accounting officer.
The move seems intended to allow Thompson to focus on the operational side of running the department, while Troup, who currently signs off HMRC's biggest and most sensitive settlements – provides specialist tax knowledge.
By contrast, Homer – who in January announced that she was stepping down from the top HMRC job – does not have a background in taxation, having previously run the Department for Transport and the UK Border Agency. She told MPs last month she was not a "deep expert" in tax matters.
The statement from HMRC said "arrangements for assuring large tax settlements in HMRC will be reviewed following Edward Troup’s appointment as executive chair".
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Announcing the appointments, cabinet secretary Sir Jeremy Heywood said: "Edward’s deep tax expertise and long experience in both HMRC and HM Treasury make him an excellent choice to lead the department through an important phase of change and amid unprecedented public interest in taxation.
"Jon’s experience of leading one of the biggest departments in government, coupled with his strong financial background, make him strongly placed to deliver HMRC’s ambitious transformation plans, large-scale operations and modern customer services."
Chancellor George Osborne also emphasised Troup's "wealth of experience in tax" and Thompson's "operational and financial expertise", and said HMRC would now be led by "one of the country’s pre-eminent tax experts and an outstanding civil service leader with experience of transforming large organisations".
Thompson said it would be a "wrench to leave the Ministry of Defence", but the outgoing MoD perm sec said he was "excited to be taking up the challenge of leading the delivery of the department that raises the revenues that pay for the nation’s public services".
He added: "With 50 million individual and 5 million business customers, HMRC operates at a scale that few organisations can match."
Thompson faces a number of big organisational challenges when he takes on the HMRC job. Over the next decade, the department is looking to cut the number of offices it is based in across the country, moving from 170 sites to just 13 specialist regional centres.
HMRC also has long-running issues with staff morale, ranking lowest of all the government departments in the civil service's annual people survey, with an engagement score of just 45%. Meanwhile, it is looking to further reduce its headcount, which has fallen by more than 30,000 since 2005, and roll out ambitious new digital plans for individual online tax accounts.
But despite a recent, high-profile controversy over its £130m settlement with search giant Google – the subject of a new report by the public accounts committee published on Wednesday – HMRC can point to a number of achievements on the tax collection front.
The department estimates that its compliance work – cracking down on people who fail to meet their tax liabilities – saved £26.6bn in 2014, while the latest figures show that the tax gap – which measures the difference between the amount of tax due to the exchequer and the amount actually collected in a given year – had narrowed by 0.2% year-on-year.
"Ambitious plan"
Troup, who served as director general of tax and welfare at the Treasury before moving to HMRC in 2012, said he was "delighted to be appointed" as executive chair of HMRC.
"It has been a privilege to be tax assurance commissioner over the past three years and I look forward to leading HMRC along the path of transformation that has been established and to ensuring the delivery of the ambitious plan that we agreed with ministers in our Spending Review settlement in November," he added.
Troup's current role of tax assurance commissioner was created in 2012, in a bid to strengthen HMRC's governance arrangements in response to public concern over the way it handled large deals. He acts as the final point of approval for the biggest settlements, working alongside two other commissioners, and publishes an annual report setting out how HMRC resolves tax disputes.
He was one of those questioned by MPs on the public accounts committee earlier this month over the Google deal, with the committee on Wednesday concluding that a lack of transparency had made it "impossible to judge" whether the £130m, ten-year tax settlement with tech firm Google had represented a fair deal for taxpayers.
"HMRC needs to be clearer about the costs and benefi ts of its investigations," PAC's report says. "It should also seek the power to impose penalties on companies which do not cooperate fully with its investigations when tax is in dispute."
In a response to that report, HMRC said the department did "not settle for a penny less than is due under the law from multinationals", and pointed out that the organisation is bound by laws drawn up to protect taxpayer confidentiality.
"Last year we brought in an additional £7bn by rigorously enforcing the tax rules that apply to large businesses," a spokesperson added. "We completely understand that there is a real appetite for as much information and insight as possible into how we pursue the tax payable by multinationals. We are committed to being as open and transparent as we can within the constraints of our statutory duty of taxpayer confidentiality.
"The UK has played a leading role in the OECD to strengthen international standards and to make global tax laws work better and we will continue to do so."