UK revenue chief denies failure to act against tax-dodging clients of HSBC

The UK tax authority denied it failed to take adequate action against British clients of HSBC who hid money in Swiss accounts.

Lin Homer, chief executive officer of Revenue and Customs (HMRC), said that much of the leaked data received in 2010, involving about 3,600 UK individuals, was "incomplete" and "dirty," and her department had dealt with the most serious cases.

“We were speedy and on the case, and I think we acted with real effectiveness to use the data that was available to us and got the money in the bank for the British taxpayer,” Ms Homer told the House of Commons public accounts committee in London yesterday.

The publication of details of how HSBC's Swiss unit handled accounts for tax evaders and criminals has sparked a political outcry in Britain less than three months before a general election. After a week when the Conservatives attacked the Labour opposition for being too hostile to companies, Labour is fighting back by accusing Prime Minister David Cameron and Chancellor of the Exchequer George Osborne of being too close.

Mr Cameron is facing criticism for his decision to appoint a former HSBC chairman, Stephen Green, as a minister in 2011, eight months after the Treasury was handed files from an HSBC whistle-blower. Cameron told parliament that "every proper process" was followed.

Public domain

At the committee hearings Ms Homer was asked why she had not warned Mr Cameron about the HSBC allegations at the time when Stephen Green was being considered for appointment to the House of Lords, and later as a minister.

Committee chair Margaret Hodge asked: "Wouldn't it have been sensible to draw his attention to the information? . . . You knew about the allegations of evasion and you didn't think to tell the prime minister about it."

But Ms Homer told the committee that HMRC had no responsibility to report direct to the prime minister on individuals’ tax affairs. “Our general role in appointments is to give information about the tax affairs of people,” she said.

“We undertake a role of putting information into a number of procedures, and I don’t think that what you are asking HMRC to do would be possible in all circumstances.

“We provide a certain limited role to a range of appointment committees. We have a very limited responsibility for giving limited information about individuals.”

Ms Homer added: “It was in the public domain that there was data available to many organisations, including us, about HSBC Suisse.”

In often heated exchanges during the committee hearing, Ms Homer was accused of ignoring information evident in the HSBC files.

Ms Hodge said HMRC had displayed “a pathetic response”. However Ms Homer insisted that HMRC staff had been “diligent” in their approach, and said its record of securing one conviction and £135 million in unpaid tax, fines and interest compared well with other countries.

Of the 1,100 most serious cases, only 130 are still open, she said. “I do not believe there is any lost tax in this,” she said.

The HSBC leak began as a rogue operation by a computer technician, Herve Falciani, who left the company in 2008 with five disks of confidential information. A self-described whistle-blower, Falciani provided details on the 100,000-plus accounts to French finance minister Christine Lagarde, now head of the International Monetary Fund. She passed details from the cache to governments around the world.

Tax havens

In parliament, Labour former cabinet minister

Frank Dobson

said the big four banks have 1,649 subsidiaries in tax havens but the “wrongdoing” of only one was known about. He called for a thorough inquiry as he noted subsidiaries in tax havens exist to help people and firms avoid paying tax.

Mr Dobson questioned if the HSBC subsidiary in Switzerland was the "only offender". He noted HSBC has 556 subsidiary companies based in tax havens, adding: "Why are they there in tax havens? It might be because of the weather in some of them, but not all of them."

- Bloomberg/PA