Andrew Tyrie, the committee chair, has written to Philip Hammond, the Chancellor of the Exchequer, challenging his predecessor’s decision not to give the committee the right of veto over the appointments. 

Tyrie said: ’The OTS needs demonstrably independent leadership. Giving Parliament – through the Treasury committee – a greater role in the appointment and dismissal of the OTS's senior leadership would greatly increase, and be seen to increase, its ability to provide the new Chancellor with the robust, dispassionate and high-quality advice he needs.’

The previous Chancellor, George Osborne, did not agree with the select committee on the grounds that such independence would not be ‘proportionate to the function of the OTS’.

Tyrie countered this by saying: ‘In order to be successful, the OTS must be in a position to provide you with robust, dispassionate and high-quality advice. That advice can only be improved if those charged with providing it are independent, and seen to be so.’

Osborne did, however, agree that the committee could scrutinise the appointment of the chief executive of the Financial Conduct Authority (FCA) before the candidate was formally in place, and Tyrie argued that there should be similar arrangements for the top roles at the OTS.

The letter sent by Osborne to the committee at the time stated: ‘The role of the OTS means the arrangements for the chief executive of the FCA would not be proportionate. The role of the OTS is limited to providing advice to the Chancellor on the simplification of the tax system. Ministers then make the final decisions on tax policy, balancing the objectives of simplification, fairness and growth.

‘The government is clear that the independence of the OTS is critical to its success. That is why the government has strengthened the OTS board and introduced legislation that will put it on a statutory footing.

‘The government believes that these measures, as well as the TSC’s right to hold a pre-commencement hearing for the OTS’s chairman and tax director, are sufficient to achieve the independence proportionate to the function of the OTS.’

The Treasury committee amendment has some urgency as John Whiting, who has been the OTS tax director since its inception, announced last month that he is to step down in November. There is no indication so far on who his predecessor might be.

At the beginning of this year Angela Knight endured a stormy session of the Treasury select committee answering questions about her appointment as the new OTS chair. Knight was previously chief executive of the British Banking Association over the period 2007 to 2012, and found herself repeatedly saying ‘sorry’ to the committee over her lobbying during the financial crisis and the Libor scandal. MPs suggested her previous role meant she had a ‘credibility problem’ and also raised questions about her limited knowledge of tax issues.

Andrew Tyrie’s letter to Philip Hammond is here.