Former HMRC Executive Chair joins McKinsey as tax strategy advisor

Former HMRC Executive Chair Sir Edward Troup has become an external consultant for the global management consultancy firm to advise on tax strategy and policy, having been cleared by the Advisory Committee on Business Appointments under certain conditions. Troup last worked for the UK Government in January 2018, and despite fears of conflicting interests, ACOBA has cleared the professional to return to the private sector.

With a raft of changes to tax legislation looking set to hit companies across the world, there is a growing demand for consultants to help clients navigate the shifting landscape. In particular, businesses in the UK face a radical shake-up after March 2019, when the UK leaves the European Union. In this environment, McKinsey & Company has boosted its UK tax strategy offering with a high profile addition.

Sir Edward Troup, who was knighted in the 2018 New Year Honours list, is a British tax lawyer, and was a civil servant at HM Treasury and then HM Revenue & Customs. Troup has long been a fierce critic of taxation, and has expressed the opinion that "tax avoidance is not a moral issue" while describing tax itself as "legalised extortion". According to The Guardian in April 2016, "Troup ... built a career advising corporations on how to reduce their tax bills", and during a career spanning three decades, Troup spent two periods as a Tax Partner at the law firm Simmons & Simmons, from 1985 to 1995 and from 1997 to 2004, between which he was a special adviser to Kenneth Clarke as Chancellor of the Exchequer.

In 2004, he joined HM Treasury, before becoming Executive Chair and First Permanent Secretary of the HM Revenue and Customs (HMRC) in April 2016. HMRC is a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support and the administration of other regulatory regimes including the national minimum wage. Troup announced his retirement from that engagement in December 2017.

Since his latest appointment with McKinsey, ministerial jobs watchdog the Advisory Committee on Business Appointments (ACOBA) has said that there are “some risks under the government’s business appointment rules” with Troup’s new role at McKinsey. One concern is that the appointment could be seen as a reward for decisions made in office, particularly as HMRC paid McKinsey £680,000 to help design a Brexit customs arrangement. However, while Troup had some official contact with McKinsey while at HMRC, he was not involved with McKinsey regarding any paid advice that the business provided to HMRC. Therefore, the committee concluded that Troup’s new role was not a reward for decisions made while in office.

On top of this, HMRC contacted the Big Four, McKinsey’s key competitors, regarding Troup’s appointment but “no objections or issues were raised”. As a result, the committee permitted Troup to retain his position with McKinsey, as long as he meets with a list of criteria for two years from his last day in Crown service. These include not drawing on any privileged information available to him from his time in Crown office and not advising EU tax administrations where that advice would be directly relevant to Brexit-related issues, or working on UK tax affairs, among other factors.

McKinsey similarly had to seek clearance for the hiring of former Cabinet Minister Ben Gummer, after the unseated ex-Ipswich MP was contracted as a Senior Adviser for McKinsey & Company for six months on a research project into governmental transformation. ACOBA said that “the risk that this appointment could unfairly advantage McKinsey is low”, as Gummer’s role was confined to a discrete project.

ACOBA was recently branded “toothless” by the Public Administration and Constitutional Affairs Committee in the wake of a meteoric rise in the number of former ministers being appointed to industry roles. The leap of 60% from the previous year has broadly been attributed to the regulatory body being inconsistent in its application of rules to prevent conflicts of interest.