CONTROVERSIAL former HM Revenue & Customs permanent secretary Dave Hartnett admitted his “surprise” that only one successful prosecution has resulted from the data leaked from HSBC in 2008 in the last Public Accounts Committee of the current parliament.
Hartnett conceded it was a “miserable” result for taxpayers and that he had “expected more” cases before the courts – although he did not say how many. HMRC has thus far recovered £135m from the accounts.
The furore centres on thousands of wealthy clients HSBC is said to have helped evade tax through its Swiss arm. As many as 100,000 customers are implicated, with between 6,000 and 7,000 UK-based.
Many British clients of the bank had failed to declare their holdings with HMRC, and while offshore accounts are not illegal, deliberately hiding money to evade tax is.
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 HMRC. Eventually, he pleaded guilty and was hit with an £800,000 bill. He is still the only successful prosecution to have followed the data.
The story first emerged when HSBC whistleblower Hervé Falciani stole data from the bank’s Geneva office and attempted to contact HMRC by e-mail in 2008.
Committee MPs said that it was “hard to believe” that Hartnett knew nothing of the extensive list of British account holders while occupying such a senior position at HMRC, although Hartnett insisted he took no responsibility.
“It wasn’t on my watch. I wasn’t the accounting officer. I wasn’t controlling the cases,” he said. “I knew that banks in Switzerland were, in a wholesale way, trying to take their clients around the European Savings Directive.”
Hartnett left HMRC in 2012, before going on to advise HSBC on financial crime matters. In 2013, he took a consultancy role at Deloitte, working one day a week helping developing nations improve their tax regimes.
Labour committee member Austin Mitchell told Hartnett it “stinks” he took the HSBC role so soon after his post with HMRC.
Hartnett had been heavily criticised over so-called ‘sweetheart’ deals struck with multinational companies during his tenure with HMRC. Notably in 2010, he agreed with investment bank Goldman Sachs to waive interest penalties of up to £20m on offshore bonuses paid to bank staff in order to settle a lengthy tax dispute.
Although Hartnett told the committee the “process” by which settlements such as that were reached represented his “biggest regret”, he denied HMRC ever “went soft” on multinationals.
But committee chairwoman Margaret Hodge told him: “You are associated personally, more than probably any other individual in government, with what was the old culture of doing things that people now regard as completely unacceptable.”
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