LONDON: HM Revenue and Customs is facing legal action over its failure to prosecute hundreds of British customers who used HSBC’s Swiss bank to evade tax.
Online campaign group Avaaz, which claims 40 million members worldwide, has initiated judicial review proceedings against the UK tax office over its decision to offer an amnesty to hundreds of the 3,600 UK customers it identified as potentially hiding money in Switzerland.
It would mark the first legal challenge to HMRC’s widely criticised handling of the scandal. The tax office obtained the so-called Falciani list five years ago, giving it a comprehensive database of customers of the Geneva branch of HSBC. But since then the agency has used the information to prosecute only one tax cheat.
Avaaz’s campaign director, Alex Wilks, said: “If the police extended the terms of knife amnesties to criminals caught carrying weapons, the public would be outraged. Tax officials must urgently explain why they gave get-out-of-jail-free cards to so many wealthy tax dodgers.”
In a letter sent on Thursday night, Avaaz called on the agency to explain why HSBC evaders were encouraged to use a process called the Liechtenstein Disclosure Facility (LDF), which allowed them to pay the tax avoided plus a fine equal to only 10% of the money owed. Had tax inspectors chosen not to use the facility, the letter claims, they could have imposed penalties of up to 200%. Those who opted for the amnesty were also given immunity from prosecution.
In consequence, large sums in penalties have been foregone,” Avaaz states. “Further, HMRC has lost the opportunity to bring criminal prosecutions against those guilty of widespread tax evasion.”
In evidence to parliament this February, the HRMC chief executive, Lin Homer, told the public accounts committee that HSBC customers had been encouraged to use the amnesty. She said 1,100 individuals had settled with HRMC. Asked about the process, she said: “When we talk abut the numbers that went on to settle under this, they will be under Liechtenstein. Of the 1,100, some will already have been in [the LDF] … Some will already have taken themselves into the disclosure, and we think about another 500 went in as a result of us encouraging them to do so.”
