The Swiss arm of British bank HSBC has been accused of helping its wealthy clients with offshore tax avoidance – and even tax evasion – in the national and international press.
The Swiss arm of British bank HSBC has been accused of helping its wealthy clients with offshore tax avoidance – and even tax evasion – in the national and international press. According to The Guardian, a cache of leaked secret bank account files revealed how the bank helped clients avoid and evade tax and hide millions of pounds. Panorama on Monday revealed that only one prosecution out of potentially thousands had been made by HMRC since the leaked files were made known to then-permanent secretary Dave Hartnett in 2010. Shortly after, the former HSBC chairman, Stephen Green, was appointed by David Cameron as trade minister and to the House of Lords. With HSBC already under investigation in many jurisdictions, there are now calls for the bank to be investigated in the UK.
The Public Accounts Committee (PAC) chair Margaret Hodge said that the PAC will be launching ‘an urgent inquiry’ into this issue and will require HSBC to give evidence if necessary.
In Parliament, financial secretary to HM Treasury, David Gauke, defended the government’s actions on combating tax avoidance, pointing out that the allegations in question related to activities in 2005 to 2007. He added: ‘There was no evidence to suggest Lord Green was involved in or was complicit in tax evasion activities.’ He also said: ‘The French authorities have confirmed that they will provide all assistance necessary to allow HMRC to exploit the data to its fullest.’
David Pickstone, head of tax litigation at Stewarts Law, commented that: ‘The current media focus on HSBC’s offshore dealings is only part of the ongoing saga relating to the various banks’ involvement in helping their clients reduce or extinguish their tax bills. It remains to be seen the extent to which any wrongdoing crossed the thin red line from avoidance to evasion, and the extent to which HSBC is culpable. However, this is not the only example of large private banks being deeply involved in reducing their clients’ tax bills.
‘As the debate on tax avoidance develops, we are likely to see several more private banking arms of major UK banks drawn into sharp media focus. We may also be surprised by the manner in which tax avoidance schemes were sold. The trend of vilifying the investors of the schemes and branding them as “tax dodgers” may be shifted further towards the banks, as we see examples of investors exposed to large tax bills after having relied on failed investment advice from their bank. As HMRC slowly works through its long list of avoidance schemes, we are also likely to see a marked rise in professional negligence litigation against the banks, as their clients realise the schemes they were advised to join have failed.’
Tessa Lorimer, special counsel in tax investigations at Withers, noted in a client briefing that ‘with the advent of the Swiss agreement, and the information available from the leaked files, it is now likely that HMRC and the Serious Fraud Office (SFO) will look at whether they can bring prosecutions on the grounds of conspiracy to cheat the Revenue, conspiracy to launder money and conspiracy to defraud’.
The Swiss arm of British bank HSBC has been accused of helping its wealthy clients with offshore tax avoidance – and even tax evasion – in the national and international press.
The Swiss arm of British bank HSBC has been accused of helping its wealthy clients with offshore tax avoidance – and even tax evasion – in the national and international press. According to The Guardian, a cache of leaked secret bank account files revealed how the bank helped clients avoid and evade tax and hide millions of pounds. Panorama on Monday revealed that only one prosecution out of potentially thousands had been made by HMRC since the leaked files were made known to then-permanent secretary Dave Hartnett in 2010. Shortly after, the former HSBC chairman, Stephen Green, was appointed by David Cameron as trade minister and to the House of Lords. With HSBC already under investigation in many jurisdictions, there are now calls for the bank to be investigated in the UK.
The Public Accounts Committee (PAC) chair Margaret Hodge said that the PAC will be launching ‘an urgent inquiry’ into this issue and will require HSBC to give evidence if necessary.
In Parliament, financial secretary to HM Treasury, David Gauke, defended the government’s actions on combating tax avoidance, pointing out that the allegations in question related to activities in 2005 to 2007. He added: ‘There was no evidence to suggest Lord Green was involved in or was complicit in tax evasion activities.’ He also said: ‘The French authorities have confirmed that they will provide all assistance necessary to allow HMRC to exploit the data to its fullest.’
David Pickstone, head of tax litigation at Stewarts Law, commented that: ‘The current media focus on HSBC’s offshore dealings is only part of the ongoing saga relating to the various banks’ involvement in helping their clients reduce or extinguish their tax bills. It remains to be seen the extent to which any wrongdoing crossed the thin red line from avoidance to evasion, and the extent to which HSBC is culpable. However, this is not the only example of large private banks being deeply involved in reducing their clients’ tax bills.
‘As the debate on tax avoidance develops, we are likely to see several more private banking arms of major UK banks drawn into sharp media focus. We may also be surprised by the manner in which tax avoidance schemes were sold. The trend of vilifying the investors of the schemes and branding them as “tax dodgers” may be shifted further towards the banks, as we see examples of investors exposed to large tax bills after having relied on failed investment advice from their bank. As HMRC slowly works through its long list of avoidance schemes, we are also likely to see a marked rise in professional negligence litigation against the banks, as their clients realise the schemes they were advised to join have failed.’
Tessa Lorimer, special counsel in tax investigations at Withers, noted in a client briefing that ‘with the advent of the Swiss agreement, and the information available from the leaked files, it is now likely that HMRC and the Serious Fraud Office (SFO) will look at whether they can bring prosecutions on the grounds of conspiracy to cheat the Revenue, conspiracy to launder money and conspiracy to defraud’.
