Dave Hartnett, HMRC's Permanent Secretary has admitted to MPs that he made a £8 million "error" when agreeing a tax settlement with investment bank Goldman Sachs.

Hartnett was questioned yesterday by a Parliamentary Select Committee yesterday following an investigation by Private Eye and the Guardian newspaper. MPs were passed papers which revealed that he may have misled an earlier committee over his involvement in a "sweetheart" deal with the bank.

Goldman Sachs had used EBTs and offshore planning arrangements back in 2005 in order to avoid employment taxes on employee bonuses. Hartnett had initially denied any involvement in signing off the settlement deal with the taxpayer, but it was obvious from leaked information that this was not the case. He told MPs that he became involved in the collection of some £40 million of unpaid taxes from Goldman Sachs because of his "deep tax knowledge".

Quite how the ex-district inspector managed to get his figures muddled on such a large financial settlement remains something of a mystery.  He also overrode HMRC guidelines by signing off the settlement because of his earlier involvement in the case. MP Jesse Norman called for his resignation.

Hartnett, was also involved in a tax deal with Vodaphone, it was alleged that substantial amounts of tax were waived.