UK Revenue & Customs ‘winding down’ inquiries into HSBC Swiss tax evaders

After reopening investigation into HSBC clients hiding money in Switzerland, HMRC admits it has still only prosecuted one tax cheat, reports The Guardian.

HM Revenue and Customs (HMRC) is winding down its inquiries into hundreds of British customers who used HSBC’s Swiss bank to evade tax, a senior official has admitted.

The tax authority reopened its investigation into British customers of HSBC Suisse in February, but has failed to add to the single prosecution of a tax cheat from the bank, the official told MPs on the public accounts committee on Wednesday.

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The disclosures have dismayed MPs who had pressed for further action over the HSBC files, which were first handed to HMRC five years ago. The tax office has 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.

Stephen Phillips, a Conservative member of the committee that questioned tax officials, said it was shocking that HMRC has failed to prosecute more tax evaders involved in the scandal.

“HMRC’s view that it’s OK for people who illegally hid their money in Swiss bank accounts just to pay the back tax and a small percentage penalty without being prosecuted sends an appalling message. Rightly, it makes everyone who abides by the law and pays all their taxes very angry,” he said.

Jennie Grainger, HMRC’s director general (enforcement and compliance), told the hearing that examination of the leaked data, codenamed Operation Solace, is nearing its end.

“We have collected more revenue, we now have £142m, but we have just about exhausted what we have from the data. There are no more prosecutions at this point.

“That data is pretty much exhausted. It is 10 years old now and was badly broken,” she said.

The revenue collected has increased by £7m since HMRC officials gave evidence to the committee in February.

Some new lines of inquiry have begun following a re-examination of the data with French officials, but this may not throw up anything significant, Grainger added.

“We have been back with our specialist analysts and their [the French tax authority’s] specialist analysts to look again at the data they received,” she told the committee.

“We have been able with modern techniques to come up with some new lines of inquiry. But what I don’t want to do is raise hopes about where these are going to go.

“It did not throw up any new things that we didn’t know about the data we received. For the cases we finished, we have finished.”

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 the 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.

Taxpayers now waiting twice as long on HMRC helplines

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%.

At the same hearing, the head of HMRC defended its poor record on answering telephone inquiries from customers.

It follows a report from Citizens Advice, which said thousands of people were waiting 47 minutes to get their calls answered.

“I don’t think the overall trend is worsening,” Lin Homer, HMRC’s chief executive, told MPs.

“We aren’t answering enough calls within five minutes, but we are now doing more ‘once and done’ calls,” she said, meaning taxpayers only needed to phone once.