The former Slaughter and May partner lined up to be the next chair of the Financial Conduct Authority has admitted that he invested in a tax avoidance scheme while he was at the firm, calling it an "error in judgment".

It has emerged that Charles Randell, who was a Slaughters corporate partner from 1989 to 2013, disclosed to the FCA's interview panel in January that he invested in Ingenious Film Partners 2 LLP in 2006. When the Treasury select committee sought further details about his involvement, Randell said that his financial adviser had reassured him HMRC had approved the scheme. But, he said, “It’s clear to me now that far from taking any comfort from that, I should have seen it as a warning signal”.

IFP2 enabled participants to claim tax relief from investments in film production budgets, taking advantage of generous tax breaks designed by the government to attract more movie productions to the UK. IFP2's fantastic returns brought in numerous celebrities, but it also sucked in City traders, hedge fund managers and bankers. And, in 2006, at least one lawyer looking to preserve as much of his £1 million+ Magic Circle salary as possible by funding Die Hard 4.

Ingenious' films tell the story.

By 2010 HMRC was investigating the funds and, in 2011, as participants including Jeremy Paxman, Wayne Rooney and Guy Ritchie were exposed and criticised for their involvement, Randell withdrew from IFP2. In 2014 the incoming head of the City watchdog came to an arrangement with HMRC to pay it £114,00 plus interest. 

Calls have been made for Randell to withdraw from his upcoming role on the basis that involving himself in a tax avoidance scheme created a slight credibility issue for a body whose mission statement is "protect and enhance the integrity of the UK financial system". And also because he facilitated the existence of X-Men Origins: Wolverine and Water for Elephants.

A spokesman for Slaughter and May said, “This is a private matter for Charles Randell and therefore not something on which we would comment”.