View more on these topics

FCA joins HSBC tax avoidance row

The FCA says it is “working closely” with HSBC and other agencies over claims the bank helped more than 1,000 UK customers avoid tax.

An investigation by the BBC, the Guardian and the International Consortium of Investigative Journalists last week claimed the bank had supported more than 1,000 UK customers in dodging tax bills between 2005 and 2007.

At a Treasury select committee hearing last week, FCA chief executive Martin Wheatley said the regulator had only been made aware of the allegations when they were published in the media.

In its first statement on the matter, the FCA says: “This has served to reinforce the importance of firms operating with the right culture across all of their operations.

“The FCA is working closely with the firm and other agencies which have an interest in this matter to ensure that any questions this may raise in relation to any current practices and culture of HSBC are addressed.”

HSBC has published a full-page apology in Sunday newspapers for the conduct of its Swiss private bank.

Lord Green, who served as HSBC chairman from 2006 to 2010, has also resigned his position as advisory council chairman of financial services lobby group The City UK.

Green was made a Conservative peer in 2010, and served as David Cameron’s trade minister from 2011 to 2013.

Recommended

Retirement Income live

Retirement Income Planning Live – May 2015

Retirement Income Live is a platform to assist advisers in identifying and mitigating potential risks associated with longevity, discussing and evaluating the implications of the pensions freedoms for income planning. Advising clients on the first step in retirement planning has never been more crucial or important. As advisers and product providers are seeing and experiencing […]

Johnson
2

Govt urged to default savers into deferred annuities

Influential think-tank the Centre for Policy Studies says the Government should launch a default retirement solution to stop people running down their savings too soon in the wake of the Budget reforms. Under the proposal, 55-year-olds’ pension pots would be defaulted into an inflation-linked pension, essentially an extension of auto-enrolment, known as “auto-protection”. Report author […]

Danger-Stop-Warning-Sign-700x450.jpg

FCA backs EU dealing commission clampdown

The FCA has backed plans from the European Union to bar investment firms using dealing commission to pay for research. In a feedback statement issued earlier today, the City watchdog says it would “strongly support” proposals from the European Securities and Markets Authority issued in December. Under the EU reform proposals, an investment manager will […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 21 comments at the moment, we would love to hear your opinion too.

  1. Paul Davies-James 16th February 2015 at 1:51 pm

    “Working closely with the firm”….

    Am I alone in thinking that this means that FCA staff are jockeying for position for HSBC directorships?

  2. I know my business is nothing like HSBC (thank goodness!) but if the regulator had the same concerns about the ‘culture’ of my tiny organisation, I doubt they would allow me to continue trading in any shape or form. Treating firms fairly? Don’t do as I do, do as I say, me’s thinks.

  3. Like many other readers, I am getting sick to the teeth with the negligent or wilful conflation of “avoidance” or “evasion”.

    If it’s evasion, then the FCA might be interetsed because there would be a cost to be borne by the bank and also a possible conduct issue. If it’s avoidance, then the FCA should stuff off as it has no place doing the bidding of a vote hungry politician or two. Or maybe the FCA is not a regulator that is independent of government after all?

    And journos, can you please check and sort this issue out beforehand because it is just helping politicians to exploit the confusion between two very different states of affairs. Half the bleedin’ population don’t know their deficit from their national debt because of MPs mis-speaking and jorunalists mis-writing.

  4. Barclays LIBOR rigging investigation = Hector Sants moving where? (this is on public record)

    HSBC tax dodging enquiry = ?????????

    Until the top people within the Regulator structure and Bank of England are barred from taking on top jobs within Banks or financial services firms for a period of up to 5 years after their service we will continue to have bad outcomes from these types of enquiries.

    In my humble opinion I think it’s obvious to most people that top jobs handed out to heads of regulators is seen as a backhander by many in the profession. If an IFA cannot receive a golf day from an insurance company without considerable problems and accusations that we are on the take then I’m damn sure that an ex-regulator should not receive a multi-million pound job from a bank he or she has just investigated.

    Will anybody go to jail and in fact has anybody gone to jail for libor rigging, exchange market rigging and numerous money-laundering breaches – well the obvious answer to that is NO !!!

  5. I agree with Bryan Jones.
    I have my car serviced so I can avoid a big bill as prevention is better than cure.
    I don’t EVADE the bill once I have had the work done!
    Avoiding a tax bill is LEGAL. You do things within the rules which means you may pay less tax than if you do something else which is also within the rules.
    Avoiding the postman who has your tax bill is NOT legal, it is tax evasion as you are evading paying the tax your are already liable to.

  6. Like Bryan, I thought there were two terms used: “avoidance” (legal) and “evasion” (illegal) but I believe there are actually four:-
    Tax Mitigation (ISAs/Pensions etc – legal)
    Tax Planning (Arrangement to Minimize liability – mostly legal?)
    Tax Abuse (offshore companies??, artificial arrangements – mostly illegal?)
    Tax Evasion (illegal)
    100% agree with Bryans sentiment though.

  7. “This has served to reinforce the importance of firms operating with the right culture across all of their operations”

    Er? Excuse me isn’t the right culture to put the interests of the client before all else?

    Also this was their Swiss Bank.. In case anyone hasn’t noticed this is not in the UK and presumably outwith the jurisdiction of the UK.

    Furthermore I notice that the article now used the word ‘dodging’ not avoidance or evasion. So which is it? If the former – all perfectly legal – if the latter than it is the UK resident and domiciled customer that needs to be ‘worked with’ not the bank – which presumably falls under the rules pertaining in Switzerland.

  8. If some Swiss banks were to approach their customers to tell them that they have to choose between full disclosure to the UK authorities or paying the bank a very large fee in return for which they would move the funds to a branch of the same bank in a country which does not have a disclosure agreement and close and then not disclose the existence of the Swiss account, would that be avoidance?

  9. Could the HSBC revelation be a tipping point for ‘tax avoidance’? As fashionable as bank bashing currently is this matter extends far wider incorporating accountants and solicitors as well .For all the rhetoric I don’t believe either political party has the stomach to properly tackle this as members from both sides appear caught up in various shades of tax avoidance. Parliament has legislated for enough inconsistency in taxation matters to send a message that it is okay to plan round taxation liabilities. There are two principle consequences, the obvious revenue shortfall but also the sense of social injustice with the latter capable of becoming quite pernicious. This does NOT necessarily mean raising taxes just eliminating the inherent inequities. In fact the more efficient tax collection becomes the less need there is for raising tax rates to plug revenue shortfall. The experience of France has surely shown us how not to do it? Perhaps a commitment to completely overhaul the tax system as an election manifesto pledge is what is called for. This is much needed but who ,if anybody,will step up to the plate? In the meantime expect further revelations. It feels like a re-run of the MPs’ expenses saga in the run up to the 2010 General Election. It may be a different topic but capable of the same toxicity and urgent need for reform

  10. No Harry it is not always right to put the interests of clients first. The requirement to file reports under money laundering legislation is an example and there are others. The problem is that if the rich and the large corporation regard payment of tax as optional there will be no hospitals or police force or any other public services. Just an aside but I can recommend a reading of the Wikipedia file for David Hartnell, ex HMRC chief

  11. Wonder when the Money Laundering authorities will catch-up with property transactions and places like BVI and other offshore ‘tax havens’ too, not just current transactions but details of past ones – or would this cause London property prices to implode!

    And what are the Swiss doing with national banks and disclosure – keeping quiet to avoid upsetting their business interests? It’s not just what the subsidiary of an overseas’ bank (or two) might have been doing – I suspect most tax fraudsters didn’t use subsidiaries of their own banks after all? That might help their currency weaken if the deposits start flooding out!

  12. @ Stephen Harney

    Well I wonder why the Regulator keeps telling us to put the client first?

    From your post I presume therefore that you discourage your clients from taking ISAs, not using carry forward pensions in order to soak up as much tax as possible. Eschew VCTs and EIS, Trusts and any other tool in our armoury. After all we don’t want the black hole of the NHS to suffer and we would be bereft if didn’t see a policeman on the beat once every Preston Guild. I can’t think of the other Public Services (apart from our Armed forces – which our Government treats appallingly anyway) to which you refer.

    Of course tax is optional – the richer you are the less you pay – that’s life. You have already seen that our very richest operate their firms from Monaco, Switzerland and elsewhere. I guess you may have noticed that practically every F1 driver lives either in Monaco or Switzerland.

    Perhaps if the UK tax code was simpler and lower the tax trawl would be greatly enhanced. Thatcher knew this and benefited accordingly.

    Those who are (shall we say) just better off rather than billionaires regard tax for what it is – charity (albeit enforced).

    They don’t use the NHS, having PMI. They have alarms, CCTV, security lighting and gated communities which they find a tad more effective than the police. Their children go to private schools and they pay a ransom in Council and Marginal Rate Tax. Can you really criticise them for doing all they can to minimise their compulsory charity giving?

  13. @ Harry Katz
    Firstly if our Government have seen fit to create a product and have given it certain tax advantages to encourage saving then of course I would use it in the right circumstances and of course if racing drivers choose to live in Monaco their primary tax regime should be Monaco but I believe they do have tax deducted from their uk earnings as “entertainers”.
    If companies are really operated from Luxembourg or wherever then clearly the tax regimes and rules should be strong enough to cope with that but the sort of industrial scale avoidance perpetrated by many using packaged schemes and claiming that multinational companies are run by a cat in a shoe box in a benign location are a fraud on society.
    If you cannot see how morally bankrupt your arguments are then I pity you and the next time that you moan about the price of supporting benefit claimants with numerous children just remember that they are just following a logical extension of your arguments. Yes the wealthy should pay more tax and should have the good grace to do so with a smile in the knowledge that their net income is still better than others.

  14. So Wheatley is going to be employed by HSBC soon having agreed a discount for swift settlement of a fine on £3 million a year?

    Couldn’t happen fast enough!

  15. @ Harry Katz
    clearly my response was not deemed appropriate. you may reasonably assume that I disagreed with virtually your entire reply . not really sure which part the adjudicator took exception to so will settle in the moral high ground and move on!

  16. I’m getting sick of politicians pontificating about tax avoidance and the morality of it all. There is no morality regarding tax – it’s legal or it is not.

    It’s a pity too many of the electorate don’t understand tax laws, especially CGT. I know plenty of landlords who all know the option to ‘flip’ your main residence to your second property, but I don’t know anyone who had the nerve to try it. Then when the expenses scandal emerged we soon found out how many politicians had that nerve.

    Surely that’s tax avoidance isn’t it?

    But maybe we get the politicians we deserve.

  17. ‘Have your say’ is becoming a bit of a joke when you suppress contributions.

    Last week it was worry about being sued for reprinting information already in the public domain – Margaret Hodge’s family business using the tax laws to pay virtually no tax and the fact whilst in charge of Islington council having too much of an interest with P.I.E. I even gave you web links on this.

    Yesterday – my thoughts about Wheatley forgiving HSBC on a fine and ending up on a contract of employment on £3m pa with them is a perfectly reasonable observation if you look at Sir Hector’s behaviour.

    Do you want a free press or not?

  18. If it is evasion, it needs to be pursued and those brought to account. If it is avoidance, it is a moral issue and if appropriate can be dealt with through new legislation. Most people will try to avoid paying too much tax and will use, for example, salary sacrifice. What concerns me more is that the larger multinational businesses seem to get away with blue murder. This is where politicians and the tax authorities should be focusing their attention, rather than trying to score points against each others parties. As a matter of interest, are MP’s expenses taxable?

  19. Why are all the politicians harping on about the tax avoidance issues. Its very simple – Tax avoidance is legal, evasion is not. So why does the Govt not simply change the legislation to allow HMRC to produce a list of products/schemes which are legal avoidance mechanisms. If its on the list you can legitimately use it, if you use something that is not on the list and is used, it is tax evasion and should be prosecuted to the flu extent of the law once all tax due has been gathered. It is not rocket science, it really isn’t.

  20. Marty

    The reasons why the government will not produce a list is that they become liable if that list is incorrect.

    It’s the same reasons why the FCA will not produce a list of ATR rankings for funds and even kite marking said funds because it doesn’t want the liability.

    What I don’t understand about this debate is why is it that the advisers who push the tax code to the limits don’t realise that they are putting their clients at considerable risk. I wonder how many rich celebrities for example would have rather paid the tax than have their tax affairs spread across the media to be ridiculed by the general public. I suspect these individuals would have rather paid the 45% tax on their income rather then have the negative exposure plus not forgetting the HMRC fines and the potential doubling of the tax bill when these things are deemed to be incorrect like Eclipse 35. Now I know that’s a little bit different from the HSBC thing but it just shows the arrogance of firms who seem to think they are above the law whether that is Banks or the big four accountancy firms etc.

    On the politicians front why the hell have both Labour and Conservatives over the last 20 years not been giving HMRC the resources they need to collect tax in the proper manner. I think many people in the profession have experienced the incompetency of HMRC, for example if you write to the revenue on a technical matter you’ll either get referred back to the manual for your answer or get three or four different opinions. That just illustrates to me that there is the chronic shortage of expertise within the revenue which interesting enough was made worse over the Labour years with a reduction in tax inspectors.

    It’s interesting that some of these firms are getting so large that they no longer take into account reputational risk for either themselves or their clients, that in my opinion is a real problem.

    No doubt will see a string of small to medium size adviser firms go bust with claims going to the FSCS – which is totally ridiculous as tax advice is meant to be non-regulated but we are all paying higher fees for UCIS misselling. Like always it’s the advisers who like to do the right things by their clients that end up paying for the idiots who seem to be out to make a fast buck at the expense of others. Sorry if that’s a bit brutal but I for one am a bit fed up having to pay for the mistakes of others!

    Not forgetting that where there’s blame there’s always a claim!

  21. Avoidance/evasion, Guidance/advice.

    There seems to be a pattern here where it suits the powers in charge to blur the lines.

Leave a comment