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11 Feb 2015 05:00pm

HMRC grilled over HSBC avoidance

HMRC executives and MPs from the Public Accounts Committee (PAC) have taken part in angry exchanges over the Revenue’s handling of tax avoidance allegations against HSBC Switzerland

PAC chair Margaret Hodge told Revenue CEO Lin Homer that HMRC was not proactive enough in retrieving tax due from suspected evaders.

Hodge said, “You sit there waiting for people to come to you. You don’t go out [and investigate] in the way that other authorities do.”

You sit there waiting for people to come to you. You don’t go out [and investigate] in the way that other authorities do

Margaret Hodge

The Labour MP for Barking and Dagenham also lambasted Homer for failing to collect more money from suspected tax schemes, saying that HMRC “collected less than the French and Spanish” despite having a larger list of suspects.

Homer told the committee that, after looking at a total of 6,800 entities and subsequently identifying more than 1,000 tax evaders, there had only been one conviction and a smaller sum of recouped tax.

However, after taking criticism for HMRC’s lower recovery of tax – a total of £135m – and low conviction rate, a frustrated Homer told the PAC that the Revenue could only collect and pursue tax that was due.

“We can only collect what is due,” she said. “The accounts may have had different or greater sums but I can only pursue tax.

“To be clear, we have always told you that we use the full range of our tool kit. We are after the tax, after a change of behaviour, and a deterrent.”

Referring to the allegations published in the Guardian regarding HSBC, she also told MPs that “the things that get written in newspapers do not stand up to the test of criminal evidence”.

Homer was responding to MPs’ joint concerns that only one conviction had arisen from the Swiss leaks, while no prosecutions had come from a list of 4,800 HSBC clients based in Jersey.

While Homer has repeatedly insisted that prosecution is just one “expensive” option from a range of tools at HMRC’s disposal in dealing with tax avoidance and evasion, PAC member Stephen Phillips said he was “slightly horrified” and “concerned” that HMRC had “only brought one prosecution”.

“Not prosecuting people for tax evasion does not deter others from doing it […] only having one prosecution has precisely the opposite effect,” he said.

The Revenue was also questioned with regards to a last minute change to committee attendance. HMRC pulled Edward Troup, the second permanent secretary after Homer, just hours before being due to appear before the PAC.

In a statement, Hodge made it clear that Troup would have to attend the committee’s next meeting, or further action would be taken.

Addressing Homer she said, “It is not for you to decide who appears in front of this committee. We will expect Edward Troup to be here in our session on 4 March.”

Oliver Griffin

 

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