Downing Street rejects inquiry into handling of HSBC files

Downing Street has rejected calls for an inquiry into the handling of 3,000 suspected tax evaders with accounts at HSBC’s Swiss private bank, which has so far led to a single prosecution.

The prime minister’s spokesman said officials had done what they could to make sure people paid up and argued it was “right that HMRC prioritised collecting revenues” before bringing cases where they could work with prosecuting authorities.

The Treasury is coming under increasing pressure to explain why HM Revenue & Customs did not pursue those suspected of criminal evasion more vigorously, after the business secretary, Vince Cable, said a review would be a good idea.

HMRC and Treasury ministers claim France put restrictions on the use of the leaked HSBC files, which have only just been eased. But this account was undermined by the French finance minister, Michel Sapin, last week, who suggested the UK could have found ways to pursue criminal cases.

Asked whether the prime minister was happy with the UK tax authorities’ handling of the leak, David Cameron’s official spokesman said: “HMRC, as I see it, took the information that they had, they went through the 6,000 or so cases, they whittled that down to 3,000 specific ones to look at, went after those who were non-compliant to recoup them and launched prosecutions where they could. So they did look at and take forward action on prosecutions when they went through this HSBC data.

“HMRC went after those that were not compliant and focused on making sure that those people who had not paid the taxes that were owed did so … The people who should have paid tax have had to pay tax. And then they did what they could with the restrictions that were imposed on them by the French on the information which has led to one prosecution so far. Clearly those restrictions have now been eased and, as HMRC said last week, they will therefore continue to have discussions with prosecuting authorities about any further action that should be taken.”

Downing Street’s defence of HMRC came as HSBC took out a series of newspaper advertisements to offer its “sincerest apologies” for the conduct of its Swiss subsidiary.

HSBC had faced a torrid week after the Guardian reported that a huge cache of leaked secret bank account files showed that the bank’s Swiss subsidiary encouraged massive tax avoidance and allowed clients to withdraw bricks of cash.

In the advertisement, Stuart Gulliver, the group chief executive of HSBC Holdings, said society expected better of its banking industry, though he pointed out that the leaked files related to events eight years ago. But Gulliver suggested that the media had focused on 140 clients because many of them were well known. “We have absolutely no appetite to do business with clients who are evading their taxes or who fail to meet our financial crime compliance standards,” he said.

The chancellor, George Osborne, and his team of Tory Treasury ministers have adopted an unusually low profile after their initial response to the HSBC leak – pointing out that Labour’s Ed Balls was responsible as city minister between 2006-07 – was widely challenged. The documents were not passed to HMRC until May 2010. In an interview on the BBC’s Andrew Marr show, the shadow chancellor mocked the usually television-friendly Osborne for his absence from the nation’s screens.

Cable then increased the pressure on Osborne over the lack of prosecutions when there was clear evidence of illegal tax evasion. The Liberal Democrat also asked what was being done to recuperate lost tax revenue and what lessons were being learned.

The business secretary told Pienaar’s Politics on BBC Radio 5 Live: “I have written to the chancellor during the week on the back of the HSBC issues asking for satisfaction that the various inquiries that took place around the Swiss subsidiaries have been properly followed through and there has been sufficient level of vigilance.”

Cable also criticised the way in which HMRC appears to take a tough approach to relatively less well-off taxpayers while taking a lax approach towards large corporations. He said: “If you are a small company or an ordinary individual, you are often hounded by HMRC often for small sums of money. I’ve got disabled people who’ve had their benefits taken away because there was a suspicion they may have claimed a few pound extra. And yet at the same time, large numbers of people are getting away with millions with apparently rather perfunctory investigations.”

The intervention by Cable came as Danny Alexander, the Liberal Democrat chief secretary to the Treasury, said he had written to HMRC to ask whether it had adequate powers in light of the HSBC scandal.

Alexander told BBC1’s Sunday Politics show: “What worries me about this recent case is do we need extra legal powers for HMRC, for example? Is there a need to make sure that there are additional offences for people who are conspiring to enable tax evasion? I’ve asked HMRC for their advice on that and if they come back and say we need extra powers, we need extra resources to tackle this particular problem, as I have at every stage in this parliament I’ll make sure they have what they need.”

The leaked HSBC files placed intense pressure on the Tories after the Guardian disclosed that as many as seven Tory donors legally held bank accounts at HSBC’s Swiss subsidiary. But Labour found itself under pressure on Sunday after the Sunday Times reported that Sir David Garrard, a property tycoon who donated £690,000 to the party last year, placed shares in an offshore trust. Lawyers for Garrard told the Sunday Times the transactions for the shares in his Minerva property company were fully declared to the UK tax authorities.

Balls played down suggestions that the Labour party had been involved in tax avoidance after its largest individual donor, John Mills, gave the party £1.65m in shares in the shopping channel company JML. Mills described the arrangement as “tax efficient”.

The shadow chancellor told BBC Radio 5 Live: “You can try to say did Labour get involved in the tax efficient donation. I’m afraid it is small beer compared to what the Tories are up to.”

Balls also announced he would carry out a wide-ranging review of tax-planning schemes as chancellor, including deeds of variation on wills which has been used by the Labour leader, Ed Miliband. The shadow chancellor said he would crack down on “systemic practices”, though he indicated that the use of deeds of variations on wills was unlikely to be his main target because parents often make prudent plans for their children in their wills.

Powered by article was written by Rowena Mason and Nicholas Watt, for on Monday 16th February 2015 13.08 Europe/ © Guardian News and Media Limited 2010