THE CHAIRMAN of embattled bank HSBC will join HM Revenue & Customs bosses in a grilling before the Treasury Select Committee, as the government seeks answers over the Swiss tax evasion scandal.
The bank’s group chairman Douglas Flint will appear alongside HMRC chief executive Lin Homer, permanent secretary Edward Troup and tax assurance commissioner Jennie Grainger will appear before the committee this week.
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 not declared their holdings with HMRC, and while offshore accounts are not illegal, deliberately hiding money to evade tax is.
The story first emerged when an HSBC whistleblower Hervé Falciani stole the data from the bank’s Geneva office and attempted to contact HMRC by e-mail in 2008.
HMRC has always maintained it had no record of any contact from Falciani, but stressed it was looking into whether it did indeed receive an e-mail or phone call at the time, and if it did, what happened. That e-mail resurfaced this month and was published by French newspaper Le Monde.
HMRC has used the data to identify around 1,100 people who had dodged their tax liabilities. 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 HM Revenue & Customs. Eventually, he pleaded guilty and was hit with an £800,000 bill. He is still the only successful prosecution to have followed the data.
While HMRC has raised £135m on the back of the cache, the Public Accounts Committee chairwoman Margaret Hodge has accused the tax authority of being too soft.
In a separate development, it emerged last week HSBC’s London office created and advised on some of the UK’s largest film-based tax avoidance schemes, including the Eclipse investment vehicles which were dealt a heavy blow this week when the largest of its partnerships, Eclipse 35, was defeated in the Court of Appeal.
Between them, the schemes were worth about £1bn and were licenced to finance companies, which then sold them onto investors. Overall, HSBC received around £10m for the structures.
The turmoil has seen the bank’s profits take a 17% hit after what it described as a “challenging year” in 2014, bringing in $18.7bn (£12.2bn).
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The bank blamed the negative effect of fines and settlements and UK customer redress for the sharp drop.