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HSBC under pressure over evasion debacle

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9th Feb 2015
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HSBC is back in the spotlight again over allegedly helping clients evade tax and offering deals to help them stay ahead of the law.

Although known in tax circles for several years, the BBC Panorama team says it has now seen thousands of accounts from HSBC's private bank in Switzerland leaked by a whistleblower back in 2007.

The documents contain details of more than 100,000 clients around the world.

HSBC has since admitted that some individuals took advantage of bank secrecy to hold undeclared accounts, but said it has now fundamentally changed.

HMRC has also been criticised for its response to the revelations and for only delivering one tax evasion prosecution so far.

Shadow financial secretary to the treasury Cathy Jamieson said: “HMRC were made fully aware of these practices back in 2010. There are serious questions for the Chancellor to answer about why just one person out of over a thousand have been prosecuted in five years.”

However John Cassidy, a partner at Crowe Clark Whitehill, told AccountingWEB the reason for just one conviction was that once people have realised that the game is up, they’ve made disclosure and squared matters away as is normal.

“The big message is that for anyone who hasn’t done this, you still can and you’ve got a year left of the Liechtenstein Disclosure Facility which is perfectly written,” Cassidy said.

He added that the Panorama investigation was old news: “It’s not new news on the basis that in the professional world it’s been known for a long time that that was an issue because HSBC had stolen bank data.”

HMRC also recently updated its guidance on disclosure of Swiss bank accounts and other offshore investments to include a Swiss standard disclosure pack.

The tax yield from the LDF for undeclared offshore liabilities has climbed through the £1bn barrier, but is likely to be short of delivering the £3bn originally promised.

The Swiss standard disclosure pack is available on the GOV.UK website

Replies (26)

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By Donald6000
11th Feb 2015 11:37

HMRC and HSBC tax evasion

The best thing to do in these circumstances is to promote the offenders to the House of Lords. That should be a short sharp lesson to those nobodies who whinge on about accountability. How dare they challenge the upper classes and bankers, what ho, more champers.

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By listerramjet
11th Feb 2015 11:43

hack rag

the standard of journalism on this site gets worse.  This is only a story because there is an election coming up - and it hits many of the labour party buzzwords - although not enough to shout bingo!  Shame on you for getting dragged in.

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Replying to Tax Dragon:
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By listerramjet
11th Feb 2015 12:43

bit unfair

The standard of debate in Parliament is as it always was.  I think you may be referring to PMQs?  In any case, this is not a tax dodger story (whatever that means) - the political slant is about tory toffs looking after their own.  Probably the only narrative that the Eds have in this campaign!

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By dstickl
11th Feb 2015 11:58

A question not yet asked by journalists ...
 WHY didn’t HMG insist on receiving an anonymised copy of the HSBC tax evaders disc, in order to monitor progress - or lack of it - by HMRC ? After all, patient anonymity is a key part of some NHS reports, isn’t it ? Here’s some of the background:

 Alleged "Tax Payer Confidentiality" seems to me to be a reason currently dished out by various HMG ministers for not being informed about the vast scale of this scandal of corruption. 

IF politicians had really wanted to get a grip ... of this scandal of corruption ... which had actually been signalled to MPs on the HoC Treasury Select Committee by HMRC's Hartnett in September 2011 with the recorded words of “I think the whole nation probably knows that our department has a disc from the Swiss – from the Geneva branch of a major UK bank – with 6,000 names, all ripe for investigation.

Hartnett went on: “We have hundreds under investigation, some of them under criminal investigation, and we are about to challenge another 800.   Then we will industrialise the process, challenging 1,000 at a time, with a view to having all those who need challenging challenged pretty quickly.

The chief tax inspector (Hartnett) did not name HSBC, but the bank had been identified in numerous newspaper reports at the time, and its identity was readily apparent. 

It was also in the public domain that HSBC had tried in the French courts to block French officials handing the disc to the UK tax authorities, pleading client confidentiality.   But it was handed over, with HMRC telling MPs that it had been received in June 2010, before former chairman HSBC Stephen Green was made a Tory peer and became a trade minister.

(A)  ... THEN SURELY HMG SHOULD HAVE INSISTED ON RECEIVING  AN ANONYMISED COPY OF SAID DISC, IN ORDER TO TRACK HARTNETT'S PROMISE TO ... industrialise the process, challenging 1,000 at a time, with a view to having all those who need challenging challenged pretty quickly.” AND 

(B) HMRC ETC SHOULD HAVE USED THE DISC DATA AS A BASIS TO INSIST ON THE RELEASE OF DOCUMENTARY EVIDENCE BY THE SWISS ETC TAX ETC AUTHORITIES TO UK'S CPS, ETC .

 

Yet Matthew Hancock MP [Minister of State for Business and Enterprise, Minister of State for Energy, and Minister of State for Portsmouth] so far seems to get away with hand wringing about tax evaders, because of the alleged need to keep any details relating to such crooks confidential, i.e. details can't be anonymised - unlike NHS patient data !

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Replying to Wanderer:
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By listerramjet
11th Feb 2015 12:49

you miss the point

the disk was evidence of account and transaction - evidence of tax evasion or avoidance will have required further investigation.  HMRC's remit is clearly to collect tax - which they appear to have prosecuted with some success.in these cases.  Parliament has no executive role in the detail, and nor does it have any right to details of individuals and their tax affairs; it is for the relevant ministers to hold the executive to account.  There is no particular suggestion that policy needs to be changed, and all Hodge seems to be doing is electioneering.

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By Michael C Feltham
11th Feb 2015 13:17

I do fervently wish..........

That journalists would try and comprehend complex subjects, prior to bursting into print!

Perhaps one might usefully, plagiarize the doughty Iron Duke's sentiments to "Publish and be damned! By my own incompetence!"

1.  HSBC Switzerland is a wholly owned subsidiary: and therefore not subject to either UK statutes or EU law. Thus the hunting pack, screaming for blood could accuse the UK based directors of perhaps lack of oversight and that it all.

2.  Global banks have been engaged in, err, assisting those not content to contribute to such as the UK's political circus of utter fiscal profligacy and incompetence since banking was invented in Lombardy!

3.  Any villains in the melodrama, are those who somehow have contrived to move their capital, illegally, outside the jurisdiction of the United Kingdom; these are the malfeasors who demand prosecution!

4.  However, the Great Gods, HMRC have been content to deal with the matter under the undeclared tax moratorium and collect tax due, plus interest plus penalties; as the law of the land allows them to do.

The inescapable conclusion, therefore, is this witch hunt is simply a party political ploy, to assuage the ruffled feathers of the over-taxed majority of Mr and Mrs Average.

Neatly, naturally, avoiding the similar naughty activities of Labour Party donors, since Harold Wilson's chum, Lord "Gannex"! Remember Mandelson and Geoffrey Robinson?

Those of us of grizzled years of cynical comprehension, might well remember the Rossminster scandal, where this Westminster based company of tax avoidance advice, numbered a multitude of political and public figures on their client base......

As Wilson himself stated, "A week is a long time in politics!"..................

 

 

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By Ted Numbers
11th Feb 2015 14:00

Michael is quite right

But why let facts get in the way of a good story eh?

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By abelljms
11th Feb 2015 15:35

Panorama show was a great negvertorial for HSBC

 

 

 

Still the Panorama show was a great negvertorial for HSBC.

IF it had been praising them for 30 mins on primetime BBC they would have been all over it like a rash offering interviews etc. It was a mistake to refuse to contribute though, because us ignerent people jump to the rash conclusion the bank is guilty.

Ditto HMRCy refusing to take part makes the mud look sticky on their faces too?

Still the big issue remains - why do rich people find it sooooo hard to pay their fair whack of tax?

 

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Replying to Justin Bryant:
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By Michael C Feltham
11th Feb 2015 16:53

Ay! There lies the rub!

abelljms wrote:

Still the big issue remains - why do rich people find it sooooo hard to pay their fair whack of tax?

 

Ah! Remember the celebrated case of the American woman Leona Helmsley: who said "Tax is for the little people!"

http://en.wikipedia.org/wiki/Leona_Helmsley

As the Bard once said "Ay; here lies the rub!".

Perhaps these "Rich People" have become rich, by using the services of highly qualified and paid Tax Barristers, Attorneys and Accountants, to so structure their capital wealth as to remover it from the greedy grasp of utterly profligate politicians?

The problem lies, originally, in Lloyd George's People's Budget (Later enacted in point of fact by Herbert Asquith), who stated "We are going to tax the rich as never before!".

http://en.wikipedia.org/wiki/People%27s_Budget

However, the net result was the uber wealthy created trusts and made other plans (Tax Planning or Tax Avoidance if you prefer); which is why decades later (and even still today), instead of being taxed into poverty, they still owned/own their estates: and the bulk of the tax was and is paid by the working class and the middle class! Who cannot restructure their income stream and employers are compelled to use Schedule E.

Dave, Osborn, Milipede, Balls, Hodge et al are simply engaged in political posturing: as always. Empty words and hollow promises.

If Britain was to unwind any of the significant Dual Taxation Treaties (over 100 at present), then this act would trip both a Trade War and a Capital War; and these political clowns know it!

(It is use of these treaties, which allow a multinational to select the most favourable base for their fiscal registration, residence and jurisdiction)

"Double tax treaties

Double Taxation Treaties are conventions between two countries that aim to eliminate the double taxation of income or gains arising in one territory and paid to residents of another territory. They work by dividing the tax rights each country claims by its domestic laws over the same income and gains. Over 1,300 Double Taxation Conventions exist world-wide. The UK has one of the largest networks with more than 100."

Source: http://www.icaew.com/en/library/key-resources/double-tax-treaties

 

 

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By Donald6000
11th Feb 2015 17:22

Lin Homer gives no answers at today's Committee

Entirely predictable. Homer gave no answers to any of the questions which would have identified tax dodgers. That is because she knows full well that she cannot and therefore Hodge is up a grandstanding gum tree.

So no change there then.

 

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By michaelblake
12th Feb 2015 09:44

Deterrent Effect?

 

I believe that it is still HMRC policy, as it has been for decades, to take some prosecutions in cases of evasion, to set an example to others who might be tempted to enter into the same type of behaviour and to act as a deterrent.

That does not seem to have happened in the case of offshore accounts.

 

 

 

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Replying to Tax Dragon:
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By Michael C Feltham
12th Feb 2015 14:25

Pour Encourage Les Autres!

michaelblake wrote:

 

I believe that it is still HMRC policy, as it has been for decades, to take some prosecutions in cases of evasion, to set an example to others who might be tempted to enter into the same type of behaviour and to act as a deterrent.

That does not seem to have happened in the case of offshore accounts

 

Indeed.

Some few years ago my practice was asked to act for a gentleman of certain profile, who had wittingly defrauded HM Customs of oodles of VAT. And was sentenced to 18 months. Pour encourage les autres! At his Crown Court trial he offered to pay the asserted VAT loss plus interest and penalty. However, the judge, regretfully stated he was unable to accept and the trial must proceed.

After three meetings and consultations in attempting to assist him, I carefully wrote declining the instruction, stating clearly we could not assist him.

Since quite obviously he was immune to cogent advice and was "At it once again".........

 

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By mikefleming3028
12th Feb 2015 12:27

HSBC, HMRC and PAC

Any one  interested should search out and view yesterdays Public Accounts Committee grilling of Lin Homer on the subject, compulsive viewing for those with a thirst for blood.

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By mikefleming3028
12th Feb 2015 17:10

Code of Practice 9

Why not have a debate as to  why in this day and age Code of Practice 9 is still in general use?

If the public, or for that matter, the press understood that this process was available  but only to those who were non compliant in a massive way  there would I believe be an out cry. If HMRC are serious about getting to grips with serious tax evasion then why do they continue with this process. As for the 2500 prosecutions claimed by HMRC this year the majority were for sums that were tiny in comparison to the huge sums being evaded with the help of HSBC Swiss.

Time for a root and branch review of this Code of Practice designed  for the benefit of the wealthy the moto of which could possibly be "if you are going to fiddle,  fiddle big" then if you get caught you can buy your way our of a prosecution. Discuss!!  

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By listerramjet
13th Feb 2015 12:47

adjectives

we have almost got used to aggressive tax avoidance.  Now we have to contend with serious tax evasion!  What will the next one be?

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Replying to acceje:
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By dstickl
13th Feb 2015 12:52

@:listerramjet: ... legal tax planning.

listerramjet wrote:

we have almost got used to aggressive tax avoidance.  Now we have to contend with serious tax evasion!  What will the next one be?

HMG encouraged legal tax planning.

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By AndrewV12
24th Feb 2015 10:54

gold deposits

Swiss Banks have been linked with dodgy deposits and money laundering since the beginning 

of time and probably always will be.  As for HSBC they were just a vehicle for directing peoples money in the right (or wrong) direction.

 

I wonder if Swiss banks still hold any [***] gold.

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Replying to leicsred:
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By Michael C Feltham
24th Feb 2015 11:32

Easy To Spot!

AndrewV12 wrote:

Swiss Banks have been linked with dodgy deposits and money laundering since the beginning 

of time and probably always will be.  As for HSBC they were just a vehicle for directing peoples money in the right (or wrong) direction.

 

I wonder if Swiss banks still hold any [***] gold.

Well, whoever had it they certainly knew: since [***] gold was embossed by the swastika and was corrupted with base metals.

Real Bullion Grade gold must be 99.99% fine: i.e. as near as pure as possible, whereas [***] gold bars were around 90% fine only.

By now it has all been re-refined, re-stamped and no way of telling.

A lot of [***] gold, apparently, was smuggled into South America using the last U Boat series, the XX1: to fund ODESSA and The Kamaraden.

http://www.uboataces.com/uboat-type-xxi.shtml

 

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By AndrewV12
24th Feb 2015 11:41

Gold

Great reply that told me.

Blimey how did you know all that, a history buff I take. 

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By AndrewV12
24th Feb 2015 11:45

U Boat

Hi Michael

I have just read the article, those uboats were very advanced, maybe the [***]'s spent all their gold developing new Uboats. 

 

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By Michael C Feltham
25th Feb 2015 11:30

Strange Life!

Andrew:

I have enjoyed a very interesting life!

Earlier I was FD of a City trading and projects company and travelled a lot: plus, having been earlier involved in banking and the money markets, had quite a bit to do with gold and other trading.

WWI and II are research topics I am very into: I am a writer and analyst.

Indeed, if the XX1 series Uboats had entered service earlier, Britain would have completely lost the Battle of the North Atlantic, without doubt.

It is also clear, that much [***] wealth was recycled thru the global banking system and fed back to Germany and founded what are now large companies: and many high ranking SS officers etc, were over time, smuggled back into Germany under new IDs. The allies ran out of interest in trying to arraign all war criminals as rebuilding the country became more important.

Read Freddie Forsyth's powerful book, The Odessa File; Forsyth is a tireless researcher and acknowledged war historian as well as a brilliant novelist.

 

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Replying to johnjenkins:
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By AndrewV12
25th Feb 2015 14:48

The Odessa File

Good afternoon Michael

Thank you for your email, I did not know that about some large German Companies, at the moment I am trying to learn basis Spanish,  would it be okay if I read The Odessa File after I can speak and write basic Spanish, ........................................ it may take a while, hopefully not as long as the Battle for the Atlantic.

 

Regards (Saludos)

 

Andrew 

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By Michael C Feltham
26th Feb 2015 11:16

Hola !

Buenos  día

¿ Cómo estás ?

¡ no hay problema !

¡ Vaya con Dios !

Miguel

 

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Replying to memyself-eye:
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By AndrewV12
26th Feb 2015 12:51

Buenas Tardes Miguel

 

Now let me see.....

 

Buenos  día

¿ Cómo estás ?    Estoy bien

¡ no hay problema !    Hace Viento

¡ Vaya con Dios !  Si

Miguel           Saludos  Andrea :)

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By andrew.hyde
26th Feb 2015 11:58

Conejo, conejo, conejo.

Si la gente desea comenzar a hablar el uno al otro en castellano me tomaré mi negocio a otra parte. Adiós y gracias.

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Replying to Accountant A:
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By AndrewV12
26th Feb 2015 12:59

Hi Relax Hola relajo

Buenas tardes Andrea

Relax, we wont continue with our Spanish lessons, bit of  a shame but we dont want to upset anyone.

TENGO SED, Vamos off i go.

Saludos

 

Andrew

 

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