HMRC admits to winding up inquiry into HSBC tax evasion claims 

Only one person was prosecuted following claims the bank turned a blind eye to illegal activities of hundreds of wealthy customers

HM Revenue and Customs has wound up its inquiries into claims that hundreds of British customers used HSBC’s Swiss bank to evade tax, a senior official has admitted for the first time.

A public accounts committee hearing has been told there is no longer any criminal investigation despite claims that the banking arm had turned a blind eye to alleged illegal activities of wealthy individuals including arms dealers.

The tax authority reopened its investigation into British customers of HSBC Suisse in February 2015 following a public outcry over the alleged large-scale fraud, but has failed to add to the single prosecution of a tax cheat from the bank.

The disclosures have dismayed MPs who had pressed for further action over theHSBC files, which were first handed to HMRC six years ago. Senior tax officials have been criticised for offering an amnesty to hundreds of the 3,600 UK customers it identified as potentially hiding money in Switzerland.

The files were the basis of reports by the Guardian and a collaboration of news outlets around the world about the scale of the tax avoidance operation being run by the bank’s Swiss subsidiary.

It comes just days after reports emerged that HSBC would not face formal actionfrom the City regulator, the Financial Conduct Authority.

Simon York, the director of HMRC’s fraud investigation service, told MPs that the data had been exhausted. “We have been working with that data and all of those people featured on that list for some time. We do not have a current criminal investigation in relation to any entities connected with this data,” he said.

Stephen Phillips, a Tory member of the committee, responded by expressing his anger and disappointment over the failure of the British authorities to pursue wrongdoers at the bank.

“So there it is, it looks as if they have got away scot-free,” he said. “I – and I suspect most members of parliament – would find it extraordinary that a bank that is domiciled in this jurisdiction with oversight of its Swiss subsidiary has not had action taken against it either by its regulator or by you, who are responsible for investigating it and passing papers to the CPS [Crown Prosecution Service] to conduct criminal prosecutions if appropriate.”

HMRC’s chief executive, Lin Homer – who announced on Monday that she would be standing down in April after being made a dame in the new year’s honours list – said they did not believe there was the basis for criminal action.

After receiving the data in 2010, a team of more than 300 tax officials had trawled through the evidence, HMRC said.

About two-thirds of those identified in the database were found to have already paid the right amount of tax, in part because they had non-domiciled tax status. Of the remainder, 150 were considered as serious candidates for prosecution, but only one was prosecuted.

Of the 1,100 cases where HMRC identified people as owing tax, most were settled under the Liechtenstein disclosure facility, which offered reduced penalties of up to 30%.

HSBC was fined £28m by the Geneva authorities last year, after investigators concluded that “organisational deficiencies” had allowed money laundering to take place at its Swiss subsidiary. The bank declined to comment on the criticisms made against it before the committee, where the UK tax office was accused of having “one rule for the rich and one rule for the poor” when it came to pursuing tax evaders.

About 35 prosecutions for tax evasion involving corporate firms and wealthy individuals are brought a year but the department plans to increase that to about 100 by 2020.

Homer claimed that did not mean lots of Britain’s richest tax dodgers were escaping prosecution. “Across the whole spectrum we do not prosecute everybody in every category, so there will always be individuals that we don’t prosecute,” she told the committee.

Phillips, who was leading the session for the committee, accused the tax office of only going after the “low-hanging fruit” to improve its wider prosecution figures. “The message which goes out is loud and clear,” he said. “It’s evade your taxes and you are not going to be prosecuted. There seems to be one rule for the rich and one rule for the poor.”

Homer said she strongly disagreed with the claim.

Homer also faced criticism from MPs after she said 81% of calls to HMRC were answered within six minutes.

She said they had been getting “better and better” after the first three months of last year when answering rates were so bad she had issued a public apology.

While there has only been one prosecution in the UK, the whistleblower who exposed wrongdoing at HSBC’s Swiss private bank has been sentenced to five years in prison by a Swiss court.

Hervé Falciani, a former IT worker, was convicted in November in his absence for the biggest leak in banking history. He is currently living in France, where he sought refuge from Swiss justice, and did not attend the trial.

Source: TheGuardian – HMRC admits to winding up inquiry into HSBC tax evasion claims

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