Taxation: Avoidance — House of Lords, 2015-02-09
Topic: Macroeconomics
Richard Newby (Liberal Democrats, Centre to centre-left): My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my honourable friend the Financial Secretary to the Treasury to an Urgent Question in another place on tax avoidance by HSBC. The Statement is as follows: "HMRC has a long-standing approach to tax evasion, which is based on collecting the tax and interest due, changing taxpayer behaviour to discourage them from evading in future, and enforcing the most appropriate and effective penalties. Overwhelmingly, this means providing disclosure facilities to encourage tax evaders to sort out their tax affairs, backed by civil penalties to fine them for the offence This Government have supported HMRC’s approach by increasing investment in HMRC’s enforcement capacity and by strengthening HMRC’s powers, including increasing the maximum civil fines for hiding money in tax havens to 200% of the tax evaded. There was no evidence for the possibility of prosecution of HSBC from the data provided to HMRC. However, if further evidence comes to light through the evidence published today, HMRC will of course respond appropriately This approach has been very successful in tackling tax evasion—whether from plumbers, barristers and medics in the UK or from the wealthy hiding money in offshore accounts. HMRC has collected more than £1.6 billion from 57,000 disclosures as a result of a wide range of UK and international initiatives. Internationally, since 2010, HMRC has brought in around £2 billion in previously unpaid tax as a result of the UK’s agreement with Switzerland on a withholding tax on Swiss bank accounts and the international Liechtenstein disclosure facility. In a small number of cases, HMRC will institute criminal investigations into serial tax evaders and those who deliberately conceal information from us. But in most cases, disclosure and civil fines are the most appropriate and effective intervention, and that is how HMRC has approached the receipt of data from leaks and whistleblowers, including the Swiss HSBC data that were shared with the department in May 2010 Using the civil disclosure approach, HMRC has systematically worked through all the HSBC data that it has received, and has brought in more than £135 million in tax, interest and penalties from tax evaders who hid their assets in Swiss HSBC accounts. HMRC received data about 6,800 entities, which, after removing duplication, resulted in information on 3,600 businesses and individuals. Of these, more than 1,000 were challenged and the cases were settled. HMRC believes the remainder are compliant but continues to monitor their activities. HMRC is examining whether we have all the same data that the ICIJ has, and will be asking the ICIJ for any data that we have not already been given HMRC received the HSBC data under very strict conditions, which limited the department’s use of the data to pursuing offshore tax evasion and prevented HMRC from sharing the data with other law enforcement authorities. Under these restrictions, HMRC has not been able to seek prosecution for other potential offences, such as money laundering. The French authorities have today confirmed that they will provide all assistance necessary to allow HMRC to exploit the data to the fullest HMRC’s powers to crack down on international evasion are being further strengthened by the new international common reporting standards, which more than 90 countries have agreed to as an extra tool for closing down the options for tax cheats to pursue this increasingly high-risk practice".