Every Parliamentary committee needs a good headbanger. Stephen Phillips occupies that august position on the House of Commons Public Accounts Committee, so it was down to him to question Dame Lin Homer, the outgoing boss of Her Majesty’s Revenue & Customs, on the vexed subject of HSBC and its Swiss business.
As you may remember, HSBC’s private bank there earned its money by helping wealthy clients to get out of paying their tax. Outrageous and immoral though this was, as the information from whistleblower Hervé Daniel Marcel Falciani showed, it appears not to have been illegal.
The Financial Conduct Authority has dropped an investigation and, as was made clear to the committee, HMRC isn’t about to pick up the ball.
Over to Mr Phillips, who described it as “extraordinary that a bank domiciled in the UK appears set to escape any action from either its regulator or HMRC”, when it was “essentially advising investors as to how to evade tax”.
Quite. The response from Dame Lin was vintage Dame Lin; first she declared that HMRC is “not a prosecuting authority”. Then she said that it “has to proceed on the basis of what we and the Crown Prosecution Service think is possible”. In other words, she’s inclined to wash her hands of this one.
For a moment Mr Phillips looked as if he might explode. He settled for a withering look. He will not have been alone.
HSBC and Swiss tax doesn’t appear to have much in common with the near-collapses of Royal Bank of Scotland and HBOS. What brings them together is the reaction of various authorities when it comes to holding people and institutions to account. All three are difficult and complex, and present considerable challenges. So the relevant authorities have chosen not to take any action, complaining that they have “no realistic prospect of success” or a variation on that theme.
It could just be, however, that they lack the motivation to try. In the case of HBOS a QC was commissioned by the Treasury Select Committee to look into how the Financial Services Authority came to take no action (with one exception). The conclusion: its decision-making was flawed.
As for HSBC… Other authorities in Europe and the US have picked up the ball. If they’re successful it may cast an unflattering light on HMRC’s decision to stand pat. Mr Phillips may very well blow a gasket. He won’t be alone.
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