The chair of the Public Accounts Committee Margaret Hodge has said she was "shocked to her bone" that the tax authority used laws put in place to combat terrorism to investigate an employee after he blew the whistle on a deal to let Goldman Sachs cut £8m to £20m from its tax bill.
The MP challenged the chief exec of HMRC, Lin Homer, to explain how the body thought it appropriate to use the Regulation of Investigatory Powers Act (RIPA) to dig into Osita Mba's hard drive, emails and phone calls.
"The thing that shocked me most was that you made a request under RIPA which in effect is there to deal with terrorism," Hodge said in an evidentiary hearing into whistleblowing.
"What I want to hear from you is you'll never do that again, where you've got a whistleblower. It just shocked me to my bone to see that these very very extreme powers are being used to try to hound - there's no other word - but you hounded this poor man to the extent that you've broken him, the department has broken him."
Homer said that HMRC had not acted "wisely" in Mba's case, but refused to give any assurances that RIPA wouldn't be used on whistleblowers again.
"I have said and will say again that I do not believe every decision that was made about the powers that were used was made wisely in this case and I assure you they would be made more wisely," she said. "We have a full range of powers and you know I can't give you carte blanche assurances forevermore… I have other duties of care, including to parliament and to individuals."
Hodge also criticised HMRC's investigation of Mba's then wife, whose phone records were examined after investigators were given her address, mobile and office number.
Mba blew the whistle on sweetheart deal with Goldman Sachs that let the bank off paying interest on its tax bill back in 2010. HMRC has claimed that the maximum amount of money lost to the country was £8m, but campaign group UK Uncut Legal Action has claimed that the amount lost could be up to £20m.
The campaign group took HMRC to court over the deal, but the UK's High Court ruled that although the deal didn't show the taxman in a great light, it wasn't illegal. HMRC has said that it has changed its practices since the deal was struck.
Mba, an in-house lawyer at HMRC, made his revelations to the National Audit Office (NAO) and two parliamentary committees in 2011, including the Public Accounts Committee. Steve Barclay, MP for North East Cambrigeshire and committee member, said that HMRC's response to his actions was particularly strange given that he was helping in a parliamentary inquiry.
"In a high-profile case… it's even more surprising. This was as high profile a case as you can get," he said.
Mba has since left HMRC after filing a claim under the Public Interest Disclosure Act with a London employment tribunal, which was later settled by the tax authority.
Hodge said that HMRC made it impossible for Mba to return to work. She said the lawyer was sent a letter when he asked to come back that told him he would have to wait in the foyer of his office to be escorted in. When he finally did return to his job, emails show that his department wasn't happy to have him back. Hodge quoted emails involving senior members of staff that talked about trying to get Mba moved out of litigation and general counsel Anthony Inglese saying that "his people [were] dismayed by his return to work". ®