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HSBC ‘helped wealthy clients dodge millions in tax’

Thousands of wealthy clients were helped to avoid tax by HSBC’s private Swiss bank, leaked documents reveal.

Accounts of over 100,000 international clients leaked by a whisteblower in 2007 uncovered up to 1,100 UK residents who had not paid their taxes, according to the BBC’s Panorama programme.

The documents also show how HSBC bankers helped clients evade tax including tips to help them get around the 2005 European Savings Directive, which tried to force Swiss banks to send tax on undeclared accounts to the taxman.

HM Revenue & Customs identified the tax evaders in 2010 but only one has been prosecuted, though the tax office says £135m in tax, interest and penalties have since been paid by those who hid their assets in Switzerland.

HSBC told the BBC it has already completely overhauled its private banking business and cut the number of Switzerland-based accounts by nearly 70 per cent since 2007.

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

Public Accounts Committee chair Margaret Hodge said: “I just don’t think the tax authorities have been strong enough, assertive enough, brave enough, tough enough in securing for the British taxpayers the monies that are due.”

In November, it was revealed the bank had set aside £237m in preparation of the outcome of an FCA investigation into the manipulation of foreign exchange markets.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. So HSBC helped with Tax Evasion which is illegal. Has anyone at HSBC been prosecuted for this or indeed for their money laundering scandal? I am not aware of anyone being prosecuted but I am aware that the Lord Green, the Chairman of HSBC during the relevant period became a Minister of State for Trade & Industry. I am sure we will all rest easy in our beds knowing that our Government representatives have spotless reputations for honesty.

  2. Oh gawd! Here we go again. Was this tax planning of actually fraud? It would seem that politicians and journalists don’t know the difference.

    If it wasn’t illegal then quite simply if the powers that be are in high dudgeon, they have no one to blame but themselves. Their rules are inadequate.

    As to the bank and the individuals who may have taken advantage of these – legal – loopholes – well done and good luck to them.

    How long will it be before our inept rules yet again renege on deals? We have already seen the curtailment of many pension advantages (now dressed up with a patina of ‘greater freedom’).
    How long before the PCLS or higher rate relief are clobbered? Will they keep their promises on ISAs? Look what happened to TESSA’S. Indeed the much vaunted new £15k ISA limit only takes us back almost 20 years. ISAs, single company ISAs and Tessa’s were almost in aggregate as good.

    Furthermore I do think I politicians really ought to keep shtum on this until they show that their expense diddling has ceased and they themselves are whiter than white. (We may have to wait a considerable time!)

  3. The crux of the matter seems to me to be whether HSBC advised clients that they could get away with not declaring their overseas interest earnings. If all it [HSBC] did was advise clients that a better rate of interest would be available in a Swiss account but steered clear of saying “And HMRC will know nothing about it unless you choose to tell them”, then it’s done nothing wrong.

  4. Harry Katz, you sound like a very nervous tax specialist. Muddying the water with excuses, highlighting other deplorable acts and using language like “loophole” as opposed to financial crime all add up to a very unconvincing argument. Numerous politicians have stated clearly an intention to close overseas havens and I for one am glad that there are honest whistle blowers in the world to allow these double standards to come to light. Do you pay income tax? Why shouldn’t the rich?

  5. The intimation here is that evasion and not avoidance was encouraged.

    More to the point, do advisers realize that they have an obligation to file a SOCA report even if the little chap who comes in asking about mortgages and to explain his low reportable profits says some of his work is ‘cash in hand’?

    We fear still that advisers have not grasped the reality of matters. I wonder how many Greek advisers provide reports….

  6. I agree with Philip Milton, the implication is this was tax evasion ( a crime) and by not reporting it, the adviser and bank staff commit a crime too.
    A crime is a crime and if a crime has been committed, like most other law abiding citizens I want to see prosecutions if they are justified.

    Tax mitigation/avoidance is however not a crime.

    I prefer to pay as little tax as possible and my actions will result in me paying less tax than if I had not been sensible about what I do with MY money. That leaves me more to spend on those who have a better record of using my money than Govt and in ways that do not conflict with my values in life. Tax mitigation is just common sense. Additional rate tax and the attack on pensions is going to result in at least one of my clients retiring at 55 from a very senior post with a Final Salary Pension as he sees little point in working harder from then onwards and paying masseuse of extra tax and yet the state is crying out for more people capable of doing his role and he trains a lot of them)
    Taxation should not work as a disincentive to work and save at either the lower end of the income spectrum or the higher end.

  7. Good Mortgage Man 9th February 2015 at 1:12 pm

    I bet no-one involved gets prosecuted. If a council tenant fiddles a few thousand pounds on benefits, he goes to prison. If a Banker is culpable in tax evasion, involving defrauding HMRC out of millions, they walk away scott free. How is that fair?

  8. @ Steven Balmer

    Not nervous in the slightest. The likes of Starbucks, Amazon, Google etc. found the loopholes that applied to them. Legal & above board. So it is with individuals. I certainly do not sanction Evasion, but am wholeheartedly in favour of avoidance.

    I’m sure we can all get into philosophical discussions, but basically most of us think that Governments waste our money, that those making the rules are by no means paragons of virtue or probity and far too many are regarded as milch cows by the State – so are we to deny:

    “The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted”. — George Sutherland Associate Justice of the Supreme Court of the United States 1922-38 (born in UK)

  9. What amazes me is the law is quite simple in respects to this subject as assisting somebody to commit tax evasion is effectively committing money laundering which is punishable with up to 15 years in prison.

    So it begs the question why has no banker where the bank has been fined multibillion pound fines for breaches in money laundering regulation been taken to court – I look forward to seeing some of the chief executives, compliance officers, bankers that actually did the transactions and even money laundering reporting offices being cautioned put on trial and convicted of money laundering. Until we start to do this, this will always be a problem within financial services.

    It would be interesting for Money Marketing to get a quote from the Ministry of Justice to ask exactly that question!

    Or is there one regulation for small companies and another for large banks where you get paid multi-million pound salaries to supposedly get the job right or to turn a blind eye it seems!

  10. @Peter – Now that is the million dollar question.

    The problem is you tend not to get paid that sort of money to ASK the questions, to prosecute or to whislteblow, you get paid to keep YOUR MOUTH SHUT and not have an opinion that is different to the party/corporate line and one of the problems with the regulator there is that the same is true of IT as I have continually tried to get people like Rory Percival to actual state a public opinion which may differ from the FCA line. Even MPs unless they are being whipped are allowed to have an opinion which differs from their employer!

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