No more tax prosecutions expected over HSBC, Commons committee told

Head of UK tax authority defends organisation in face of MPs’ complaints

The British tax authorities do not expect to take any more successful criminal prosecutions against people who hid money in HSBC's private banking arm in Switzerland, House of Commons MPs have been told.

During several hours of tough questioning, the head of Her Majesty's Revenue and Customs, Lin Homer, defended the organisation in the face of bitter complaints from MPs, saying that it was her job to get the money "that is due, not the money that people think is due".

The UK tax authority received nearly 3,000 names in 2009 from the French authorities, which paid a whistle-blower for computer records of private bank accounts held at the HSBC arm in Zurich.

More than 1,000 were investigated, leading to the payment of £150 million in back taxes. However, Ms Homer said officials had identified 150 cases where criminal intent was initially suspected.

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Just one of 20 prosecutions, however, was successfully pursued.

She warned MPs that more prosecutions are unlikely, since the "evidence for prosecution is very high" – even Labour MP Andy Love said a one-in-20 prosecution rate is better than nothing.

Banking culture in the mid-2000s saw them “aggressively creating tax avoidance schemes, and created an environment we weren’t happy with,” Ms Homer told the Commons’ Treasury Committee.

Meanwhile, it emerged that Revenue and Customs has now renegotiated its original deal with the French authorities – which allowed it to use the leaked information to pursue outstanding tax debts.

Under the new rules, Revenue will be able to share the files with other such bodies, such as the Serious Fraud Office, which leaves open the possibility that criminal prosecutions could be taken against the bank itself, or financial advisers.

HSBC chairman Howard Flint said he and other members of the bank's board shared "collective responsibility" for the mistakes of the past, but he rejected calls to hand back bonuses.

Three-quarters of the Zurich staff have since left the bank, he said.

Earlier, HSBC chief executive Stuart Gulliver had apologised to MPs for the practices followed by the Zurich bank: "It is an apology we would like to make to you, our customers, our shareholders and the public at large.

“It clearly was unacceptable. We very much regret this, and it has damaged HSBC’s reputation,” said Mr Gulliver, though his own tax affairs were described as “operating at the outer limits of aggressive tax avoidance” by one MP.

The banker lives in the UK and has done so since 2003, but still qualifies as a non-dom because he has told Revenue and Customs that he intends to retire to a home that he has in Hong Kong.

Conservative MP Jesse Norman complained that Mr Gulliver was born in Derby, educated in Plymouth and Oxford University, sends his children to British boarding schools and has worked for a British bank for 40 years and, yet, is still regarded as a non-dom.

Mark Hennessy

Mark Hennessy

Mark Hennessy is News Editor of the The Irish Times