(February 14, 2015)
On February 14, 2015 the UK HM Revenue & Customs (HMRC) issued an extensive statement on tax evasion and the HSBC Suisse data leak (Swissleaks).
According to the statement since April 2010, the UK government has:
· secured £100 billion of compliance revenues
· secured £31 billion from large business compliance work
· brought in £2 billion of revenues from offshore tax evasion through international agreements and disclosure facilities
· collected £135 million in tax, interest and penalties from people on the HSBC Suisse list
· secured £852 million from the UK’s 6,000 richest people
· made 42 changes to tax laws
· won more than 80% of cases in tax tribunals
· five-fold increase in criminal prosecutions for tax crimes
· prosecuted more than 2,650 individuals for tax crimes
· secured 2,718 years of prison sentences.
The statement is divided into the following 3 parts:
· Our success in tackling tax evasion and avoidance;
· Our approach to tax evasion; and
· The leaked HSBC Suisse list
In this article we focus on the part relating to the leaked HSBC Suisse list.
The part regarding the leaked HSBC Suisse list discusses the following subjects:
· How the HMRC used the HSBC Suisse list;
· How the HMRC got the data;
· Restrictions on the use of the HSBC Suisse list;
· What other countries did with the HSBC Suisse list
How the HMRC used the HSBC Suisse list
According to the statement the HMRC set up a project, called ‘Operation SOLACE’, which at its peak had around 300 tax specialists systematically examining the leaked HSBC Suisse data, to assess how it could be used to identify tax evasion and whether it provided sufficient evidence to support enforcement action against UK account holders.
The HSBC Suisse data initially revealed 6,800 ‘entities’ – individuals, businesses and trusts – but this contained duplication (some people had multiple accounts). Removing duplication left the HMRC with 3,600 entities, all of which it has examined.
The HMRC states that it investigated and challenged more than 1,000 account holders, and collected £135 million from them in unpaid tax, interest and fines. According to the statement in many of these cases, people chose to disclose their offshore income through the Liechtenstein Disclosure Facility, which according to the HMRC gave them an exemption from criminal prosecution if they fully disclosed all information.
In 150 of these cases, the HMRC sought to collect evidence for criminal prosecution. To do this successfully, the HMRC needed to demonstrate criminal intent (rather than error, for example). In addition, because stolen data is considered ‘dirty’ it needs additional corroborating evidence.
The HMRC states that with these tests of evidence, and with the exemptions arising from the Liechtenstein Disclosure Facility, it could only prepare three cases for submission to the Crown Prosecution Service. Having examined the evidence, the CPS considered only one case to be strong enough to take forward, and that was successfully prosecuted in 2012.
In around 2,000 cases, HMRC found no evidence of evasion and believe the account holders to be compliant although the HMRC states that it continues to monitor them.
The HRMC furthermore states that it is still examining around 100 cases and 400 cases were untraceable.
How the HMRC got the data
According to the HMRC in 2009, the French tax authority obtained account data stolen from HSBC’s Swiss subsidiary in 2007. HMRC states that it opened discussions with the French authorities in 2009, and in February 2010 it made a formal request under an international tax information treaty for information relating to UK account holders. According to the HMRC it was given a disk at the end of April 2010 and it then immediately began to examine its contents.
According to the statement there have been suggestions that the person who took the data from HSBC Suisse and gave it to the French had also attempted to contact HMRC in 2008. In the statement it is said that the HMRC has not been able to find any record of any email or phone contact with that person. According to the statement the HMRC is still looking.
Restrictions on the use of the HSBC Suisse list
According to the statement, the HMRC received the HSBC data under very strict international treaty conditions, which limited the use of it only to pursuing tax offences. The HMRC states that it accepted these conditions on the basis that it was better to have data with restricted use than no data at all. Furthermore the HMRC states that the conditions prevented it from sharing the data with other law enforcement authorities or for using it to investigate non-tax offences, such as money laundering.
According to the HMRC its records show that since 2010 it has asked the French on several occasions for permission to use the data for purposes wider than tax collection. The HMRC further states that as the data is now in the public domain, the French have confirmed that they will provide all assistance necessary to the HMRC.
The HMRC further states that is awaiting formal written confirmation from the French that they will alter the conditions to allow its wider use by HMRC. HMRC furthermore states that it has already started discussions with other UK law enforcement agencies about exploiting it.
According to the statement issued the HMRC has also requested copies of the data from The Guardian, BBC Panorama and the International Consortium of Investigative Journalists, in order to compare it with the data already in the possession of the HMRC. HMRC also states that it is in discussions with the French authorities to find out if there is any additional data that has not already been given to the HMRC.
According to the HMRC as far as it is aware, only the UK and Ireland have prosecuted anyone from the HSBC list for tax evasion and no prosecutions have yet been brought for money laundering.
Click here to be forwarded to the statement as issued by the HRMC. You will be forwarded to the website GOV.UK, which will open in a new window.
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