The former boss of HM Revenue & Customs told MPs that the fact that only one of HSBC’s Swiss account holders had been prosecuted for tax evasion was “a miserable result”.
Dave Hartnett was appearing before members of the House of Commons Public Accounts Committee to answer questions on the ongoing scandal sparked by whistleblower Herve Falciani, who obtained details of HSBC’s Swiss account holders while working on an IT upgrade.
Mr Hartnett said of the lack of criminal prosecutions: “I think someone [at HM Revenue & Customers] should have a good look at whether something should have been done differently.”
Mr Hartnett’s successor Lin Homer has described the work her organisation has done with the HSBC data – passed on to HMRC by the French – as providing good result for the tax payer.
Mr Hartnett accepted that only the UK and Ireland have secured prosecutions related to the data leak and said he hoped he would not upset Ms Homer with his words.
But following his testimony, Edward Troup, tax assurance commissioner at HMRC, rounded on him. Mr Troup said he was “surprised to hear him make that statement”.
“I don’t think there is any evidence to suggest that we have not been diligent” he told MPs. “We have collected £135m, all the tax, penalties and interest due [from those on Mr Falciani’s list]. I don’t see where that statement from Mr Hartnett came from.
“I believe my colleagues have been extraordinarily diligent. Criminal prosecutors want to see successful prosecutions.”
Mr Hartnett has taken a job with HSBC since leaving HMRC, holding a place on a committee set up to advise the bank on the best possible standards in the wake of its recent travails. In addition to revelations about the activities of its Swiss unit in helping clients to duck tax, the bank was hit with a £1.2bn penalty by the US authorities after it emerged that its Mexican operation had been used by drug gangs to launder dirty cash. They had also accused HSBC of being involved in sanctions busting.
Mr Hartnett defended the role, saying he was attracted to it because it would involve him in being part of efforts to clean up the bank. He said he believed in the programme set out by the bank’s under fire chief executive Stuart Gulliver, and he followed all the requisite procedures required for civil servants taking jobs with private industry before signing on the dotted line.
He also defended the deals entered into between HMRC and the authorities in Lichtenstein and Switzerland, which have enabled people not already under investigation to declare their holdings and pay tax without being prosecuted.
MPs contrasted the treatment of those running small businesses or found to have been overpaid tax credits by HMRC with wealthy individuals using overseas bank accounts to evade or avoid tax.
“I have dealt with small businesses in difficulty. We were getting money we would not have otherwise got. It must be dreadful for someone struggling to keep a business going to hear about these sums. But other countries have followed them [the deals]. They have been called ground-breaking,” Mr Hartnett said.
He defended a statement in the Swiss agreement that it would not be in the UK’s interest and would be highly unlikely for Swiss paying agents or staff to be prosecuted. This, he said, had been inserted because “we did not feel we would ever have the evidence to get them”.
Mr Hartnett was involved in a string of controversies during his time at HMRC. In addition to the tax credit over-payment fiasco, he was accused of “lying to Parliament” by the committee in 2011 over a so-called “sweetheart” tax deal with Goldman Sachs.Reuse content