New financial and civil penalties for bankers and accountants who aid and abet tax evasion and aggressive tax avoidance are expected to be included in the budget next month in the wake of the HSBC tax avoidance scandal.
Information about the planned fines emerged as George Osborne made his first detailed parliamentary response to the HSBC affair, during heating commons exchanges with Ed Balls, who accused the chancellor of negligence and of sweeping issues about HSBC under the carpet.
In response, the chancellor moved to show he was acting on the “extremely serious” allegations about HSBC Suisse by indicating that the budget was likely to include the new measures.
The chancellor told MPs: “Ahead of the budget I set the Treasury to work on providing further ways to pursue not just the tax evaders but those providing them with advice. Anyone involved in tax evasion, whatever your role, this government is coming after you. Unlike the last government, who simply turned a blind eye, this government is taking action now and will do so again at the budget.”
A government source added: “The Treasury is looking at introducing new financial and civil penalties for those who are involved in aiding and abetting tax evasion and aggressive tax avoidance.”.
However, speaking after the announcement, Lord Macdonald of River Glaven, the former director of public prosecutions, said the new financial penalties proposed by the chancellor did not go far enough. The lawyer, who produced legal opinion over the weekend to state there is “credible evidence” that HSBC’s Swiss arm had enabled tax evasion, said the chancellor should have endorsed a call made by Danny Alexander, the Lib Dem chief secretary, to create a new offence of corporate failure to prevent an economic crime.
The former DPP, who is now a Lib Dem peer, told the Guardian: “A new criminal offence would have more force and impact than financial penalties. The problem with financial penalties is that banks can afford to pay them. They seem to be happy to pay financial penalties and then just carry on misbehaving.”
Osborne also told the Commons that Britain is close to reaching an agreement with the French authorities to widen the use of the leaked HSBC files beyond HMRC. The deal will mean that law enforcement agencies, including the Serious Fraud Office, will be able to investigate whether HSBC committed any offences under UK law at its Swiss subsidiary.
The chancellor told MPs: “We are currently in active discussion which I think will come to a fruitful end to get the French to allow us to pass some of this information to the Serious Fraud Office and other prosecuting authorities to address the concern about the potential or alleged role of banks in this affair.”
In the Commons, the chancellor declined to say whether he personally asked the former HSBC group chief executive, Lord Green of Hurstpierpoint, about his tax affairs before his appointment as trade minister in 2011.
“We need proper answers today not another chancellor sweeping these issues under the carpet,” the shadow chancellor said after Osborne repeated the prime minister’s statement that HMRC had examined Green’s tax affairs as part of the usual process of admittance to the House of Lords in 2011.
Balls had forced Osborne to answer a Commons urgent question two weeks after the Guardian and Panorama reported on the files obtained in 2008 by the former bank employee Hervé Falciani.
The shadow chancellor added: “He has been the chancellor for five years since the government was given the files. Isn’t it clear either that he and the prime minister were negligent in failing to act on the evidence the government received including about HSBC and Lord Green or, just as with the appointment of [former communications director] Mr [Andy] Coulson, didn’t they just deliberately turn a blind eye?”
Osborne hit back, pointing out that the shadow chancellor was in government at key moments related to the leaked HSBC files. The chancellor said the alleged tax evasion by some HSBC Suisse account holders and the bank took place before 2006, when Balls was Gordon Brown’s most senior Treasury adviser; the news that the French authorities had gained the leaked files was known in 2009, while Balls was a cabinet member; and HMRC recovered the files in April 2010 – a month before Balls left government. Obsorne said: “All we have on the other side are a bunch of arsonists throwing rocks at the firefighters putting out the fire that they started.”
Danny Alexander, the Liberal Democrat chief secretary, indicated that any financial penalties could run into millions of pounds. Alexander told the Andrew Marr Show on BBC1 on Sunday that banks and accountants could be liable, adding: “If their customers have to pay back hundreds of millions of pounds in tax, then those organisations should have to match that with hundreds of millions of pounds of their own money. And I think that’s a very tough disincentive to them to get involved in this in the first place.”
This article was written by Nicholas Watt, for theguardian.com on Monday 23rd February 2015 20.04 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010