How David Hencke exposed Whitehall tax avoidance scandal

David Hencke saw off competition from major news organisations to win Political Journalist of the Year at the British Journalism Awards for fledgling news website exaro. The judges described his revelations over widespread Whitehall tax avoidance as a “major scandal”.

Like many great stories, it started with a whistleblower.

“I was introduced to a senior civil servant who basically was very upset about what he could see – the culture changing around him. He had picked up a lot of stories suggesting that people being appointed to jobs across Whitehall were basically avoiding tax by either having their own personal company or being employed for a management company.

“During the many meetings that took place in different pubs he actually honed on one example that he had heard at the Student Loans Company. And basically said there seemed to be definite evidence that the head had actually got a job and wasn’t paying any tax directly.

“And he thought the best way to get this was to put a very carefully honed question to the loans company and to the business department at the same time – using a FoI request. He helped me draft it so it was very precise and they couldn’t get out of it.”

Complicated scheme

“It was very complicated – you couldn’t imagine a more complicated scheme.”

Hencke explains that one senior civil servant had his own company – with a home address in the middle of the Thames – and had a flat in Glasgow, as well as all rail and air expenses, paid for him.

“All this had been very craftily arranged. Because he didn’t appear to touch the money – it went to his company. But as a result, neither the Student Loans Company nor he paid any tax.”

In addition the FoI request provided a variety of other interesting insights into the inner workings of the SLC and Whitehall.

Because Exaro broke the story with Newsnight the programme had to give notice to chief Secretary to the Treasury Danny Alexander.

“So we had to hold back and then coordinate both the programme and the story. But we actually got something brilliant out of it because obviously Alexander was terrified about it and thought, ‘what on earth I could do, I’ve been completely caught red-handed’, I can’t say these documents, it’s not like a leak where they could say it was wrong, these were actual documents supplied by the government on what had happened and he decided in reacting to this story to basically launch an inquiry.

“He announced this huge inquiry to find out what was going on. And then another source about a month or so later had discovered there were thousands of these people, but they circulated the minister their plan for their clampdown which was basically a letter between Alexander and George Osborne admitting it was huge and saying ‘we’re going to really clamp down’.

“It then started a huge check across Whitehall. And at the time I did the story the original civil servant suspected it might be widespread but couldn’t prove it. But the extraordinary thing was ministers had not noticed this going on. That’s what I found amazing – that the civil servants could create this situation and no one would know.

“So it was an amazing thing and I was really pleased because it was a major tax avoidance scam that was changed.”