Tax Avenger Sticks Up For You
Margaret Hodge accuses HMRC of bias
On Monday it was the turn of Dave Hartnett, former secretary of HMRC and Edward Troup, the current tax assurance commissioner, to face the poisonous Public Accounts Committee chairperson, Margaret Hodge. The two were giving evidence as part of the Committee’s inquiry into tax evasion and avoidance at the HSBC.
The Committee had previously taken evidence from HMRC on progress in acting on information from the Falciani list, which it received from the French in 2010, of 130,000 potential tax evaders using the Geneva branch of HSBC. HMRC identified from this list 3,600 potentially non-compliant UK taxpayers, from who it has recovered £135million and made one conviction. The Committee concluded in its Eighteenth Report of this session that HMRC’s action in this area “continues to be unacceptably slow, putting tax revenues at risk.”
The recent leaks of HSBC files in the media have raised questions regarding the role of the bank in facilitating tax avoidance and evasion and HMRC’s response. In evidence taken on 11 February, the Chair said “This is the first time in many of these leaks that we have seen in front of this Committee where there are really strong allegations not of egregious tax avoidance, but of tax evasion, and that is incredibly serious.” HMRC have since confirmed that the French tax authority have lifted the international treaty conditions on the data, which meant HMRC could only use it for tax purposes, to allow HMRC to share it with law enforcement agencies and regulators for the purpose of pursuing wider offences. The latest evidence session would allow the Committee to further examine HMRC’s response to the Falciani list and what HMRC expect, now they can share the list more widely.
Mr Hartnett regretted “the process” by which the Revenue achieved settlements with big business and had been surprised at the lack of HMRC’s prosecutions once it had received a list of 1,000 HSBC offshore account holders from Herve Falciani, the embittered former employee of HSBC. Nevertheless, it was pointed out that HMRC did manage to recover tax revenue of £135 million.
In defending his position, Hartnett said, “I did not have accountability for enforcement. I’m not here to get off the hook as I was never on the hook.” That did not stop former ‘Tax Prat of the Year’, Hodge, from wading into him and telling him that he will always be associated with the “old way” which “many people find unacceptable.”
When it was the turn of Mr Troup to give evidence he began by championing HMRC’s success in infiltrating the secret world of Swiss banking. Hodge had little time for past triumphs and was more interested in what the Revenue were doing presently, to which Troup retorted by proclaiming that the department had increased its number of prosecutions five-fold during the last 5 years. This caused Hodge to ask how many of those prosecutions were small businesses and stuck up for the small business man by accusing the department of discriminating against SME’s.
Troup batted off the criticism by responding that unequal treatment of SME’s when compared to large enterprises was simply a “perception”, angering Richard Bacon, MP, and causing him to criticise the commissioner as being “rather out of touch.” Troup however was having none of it, defiantly telling the Committee that the Revenue had worked hard to enforce SME compliance which represented £15.1 billion of the department’s tax yield.
