HSBC accused of ‘helping clients avoid millions in tax’

THE UK’S LARGEST BANK helped thousands of wealthy clients cheat HM Revenue & Customs of millions in tax, it has been claimed.

Thousands of documents showing the offshore accounts and assets of rich British customers, originally stolen from HSBC’s Geneva office by a disgruntled IT worker named Hervé Falciani in 2007, have been passed onto dozens of news outlets. The data contained the details of at least 6,000 UK customers – among as many as 100,000 overall.

Many British clients of the bank had not declared their holdings with HMRC, and while offshore accounts are not illegal, deliberately hiding money to evade tax is.

Fundamental change

HSBC admitted that some individuals took advantage of bank secrecy to hold undeclared accounts. But it said it has now “fundamentally changed”.

As part of a joint investigation, the documents were been passed to the International Consortium of Investigative Journalists, the Guardian newspaper, the BBC and more than 50 media outlets around the world.

That investigation has found that in some cases, the bank actively helped its customers evade tax. In one case, it gave one wealthy family a foreign credit card so they could withdraw their undeclared cash at cashpoints overseas.

When the European Savings Directive was introduced in 2005, it was designed in such a way that Swiss banks would take any tax owed and pass them onto the respective tax authorities. However, the investigation claims HSBC wrote to customers and offered them ways to get round the new tax.

HSBC denies all the account holders were evading tax.

One conviction

HMRC has used the data to identify around 1,100 people who had dodged their tax liabilities in this way. That evidence was used to find property millionaire Michael Shanly guilty of tax evasion, after he held his late mother’s money in an offshore account and chose not to disclose it to HM Revenue & Customs. Eventually, he pleaded guilty and was hit with an £800,000 bill. He is still the only successful prosecution to have followed the data.

Chairwoman of the Public Accounts Committee, Margaret Hodge MP told the BBC: “I just don’t think the tax authorities have been strong enough, assertive enough, brave enough, tough enough in securing for the British taxpayer the monies that are due.”

In a statement, the bank said: “HSBC has implemented numerous initiatives designed to prevent its banking services being used to evade taxes or launder money.”

The bank said it now places compliance and tax transparency ahead of profitability.

Tax partner at law firm Burton Copeland Harry Travers warned, though, that the original data had been illegally sourced, and as such should not be relied upon by the authorities.

He said: “They [HMRC] accept that they have a duty to act fairly and in accordance with the highest public standards. There is therefore no justification for their relying on illegally obtained material. They should use the lawful means at their disposal; and not unlawful means.”

The data originally came to light when Falciani’s flat was raided by French police, who confiscated the disc. It was then passed on to the French revenue, which went on to share the details with its opposite number this side of the Channel, instead of returning the information to the Swiss.