UK tax authority defends actions over HSBC Swiss accountholders

Monday, 16 February 2015

The UK tax authority, HM Revenue and Customs (HMRC), has issued a statement describing its enforcement measures against British holders of undeclared Swiss accounts at HSBC Private Bank. HMRC received a list of stolen HSBC client data in 2010.

The data was stolen from HSBC's Swiss private banking subsidiary in 2007 by a former employee. It was seized by the French tax authorities and when HMRC learned of the seizure it approached the French authorities to share this information – leading to a formal request for the names of UK accountholders on the list. HMRC received the data at the end of April 2010 and assigned 300 investigators to examine the contents, in a project code-named Operation Solace.

Removing duplication of listed entities (individuals, businesses and trusts) reduced the initial number from 6,800 to 3,600. About 2,000 of these appeared to HMRC to be compliant (either because they had already disclosed or were not liable to UK tax) and marked for no further action, although HMRC says it continues to monitor them.

A further 1,000 were persuaded to make voluntary disclosures and pay back taxes and penalties.

Only 150 of the entities were considered for prosecution under Operation Solace. HMRC stresses that the list was tainted by its illegal origin, so could not be used for tax evasion prosecutions without corroborating evidence.

Moreover, a prosecution requires proof of the taxpayer's criminal intent to evade tax. Only three cases were put forward for prosecution and only one was successfully prosecuted in 2012.

Of the remaining names on the so-called Lagarde list, some 400 were untraceable and 100 are still being investigated. The list was passed to HMRC with the usual treaty restriction that it could only be used to investigate tax evasion, not more serious offences such as money laundering. The French government has apparently removed this restriction now that the list is in the public domain, said HMRC – although this is, as yet, unconfirmed.

  • The Chief Executive of HSBC yesterday published a full-page advertisement in several London newspapers apologising for the past practices at its Swiss Private Bank. The statement also gives assurances that the bank is now fully compliant with international transparency standards.

Sources

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