But head Peter Rawcliffe has no regrets about the stunt, which shocked pupils and staff at Waterloo primary in Blackpool.
He made his move on the first day of the school's inspection to illustrate a morality tale. "I was telling a story about a boy who takes a pound;5 note and comes up with more and more lies to explain how he got the money.
"Each time I got to a part of the story where the boy told a lie I cut off another piece of the tie. There were sharp intakes of breath from the pupils."
The Office for Standards in Education report describes how the tie was "savagely cut" into several pieces "while it was still around the inspector's neck".
Mike Hammond, the lay inspector involved, said he was as surprised as the children.
"I thought something odd was up when he lent me a tie and made me sit at the front which I don't usually do. I had absolutely no idea what was going to happen," the 71-year-old said.
"The children all gasped and their eyes were so wide. They couldn't believe the head was attacking the inspector. It was indicative of the risk-taking at the school."
David Bell, chief inspector, listed the primary among the 393 most outstanding schools in England last week.
Mr Rawcliffe felt the stunt helped put pupils, staff and inspectors at ease.
"I don't know if the children will remember the story, but they will remember the assembly," he said.