Statement by HMRC on tax evasion and the HSBC Suisse data leak
HM Revenue and Customs (HMRC) has issued a statement on tax evasion and the HSBC Suisse data leak.
Since April 2010, the 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.
See HMRC Fast Facts for more information.
Our success in tackling tax evasion and avoidance
The government has strongly supported HMRC’s approach to tackling tax evasion and tax avoidance by increasing investment in HMRC’s enforcement capacity, and by strengthening HMRC’s powers.
The government has invested around £1 billion in HMRC’s compliance activities since 2010, and has made 42 changes to tax laws to crack down on tax avoidance and evasion.
Last year, HMRC secured £23.9 billion of additional revenue from our compliance activities by cracking down on tax evasion, avoidance, fraud and organised crime.
Overall, in the five years between 2010 and 2015 we will have brought in more than £100 billion of additional revenues for the Exchequer. This includes more than £31 billion from large businesses, £2 billion from international agreements and disclosure facilities and £852 million from the UK’s 6,000 richest people, through our High Net Worth Unit.
The £2 billion collected from offshore evasion has mainly come through our agreement with Switzerland on a withholding tax on Swiss Bank accounts held by UK residents and from the international Liechtenstein Disclosure Facility, through which people can make disclosure to HMRC about offshore accounts.
We have secured 57,000 offshore disclosures under UK and international initiatives.
We have also increased criminal prosecutions five-fold, and between 2010 and 2014 HMRC secured more than 2,650 criminal prosecutions and 2,718 years of prison sentences for tax crimes.
Our approach to tax evasion
HMRC has a longstanding approach to tax evasion, which is based on collecting the tax and interest due, changing taxpayer behaviour to discourage them from evading in future, and enforcing the most appropriate and effective penalties.
We have a range of enforcement tools at our disposal, including criminal prosecution and civil sanctions. In many cases, and when the evidence supports this, the most appropriate action is to pursue criminal charges.
It is important to note, though, that it takes an average of 44 months to take a case to court, with no guarantee that the money owed will be paid at the end of the process. We therefore use criminal route where we have the strongest evidence of criminal intent, for serial tax evaders and for people who deliberately conceal information when we investigate them.
In most cases of tax evasion our approach has been to offer ‘disclosure facilities’, which encourage tax evaders to come forward to disclose the truth about their affairs and sort them out, without HMRC needing to prove criminal intent.
Our approach of using all the powers at our disposal, both criminal and civil, is the same approach we take to all of our enforcement activities, whether for individuals, small and medium-sized businesses, or for the wealthy and large and multinational companies,
This has been hugely successful in collecting evaded tax as quickly as possible and HMRC’s use of our own civil powers reduce the burden on the criminal justice system. Under this civil approach, tax evaders have to pay the tax they owe, plus interest, plus a fine – which can be up to 200% of the tax owed for those who have not entered a disclosure facility.
Our powers to crack down on international evasion are being further strengthened by new International Common Reporting Standards, which more than 90 countries have agreed to as an extra tool for closing down the options for tax cheats to pursue this increasingly high-risk practice.
The leaked HSBC Suisse list leak
How we used the HSBC Suisse list
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 us with 3,600 entities, all of which we have examined.
We have investigated and challenged more than 1,000 account holders, and collected £135 million from them in unpaid tax, interest and fines. In many of these cases, people chose to disclose their offshore income through the Liechtenstein Disclosure Facility, set up by international agreement, which gave them an exemption from criminal prosecution if they fully disclosed all information.
In 150 of these cases, we sought to collect evidence for criminal prosecution. To do this successfully, we needed to demonstrate criminal intent (rather than error, for example). In addition, because stolen data is considered ‘dirty’ it needs additional corroborating evidence.
With these tests of evidence, and with the exemptions arising from the Liechtenstein Disclosure Facility, we 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, we found no evidence of evasion and believe the account holders to be compliant, although we continue to monitor them.
We are still examining around 100 cases and 400 cases were untraceable.
How we got the data
In 2009, the French tax authority obtained account data stolen from HSBC’s Swiss subsidiary in 2007. HMRC opened discussions with the French authorities in 2009, and in February 2010 we made a formal request under an international tax information treaty for information relating to UK account holders. HMRC was given a disk at the end of April 2010 and immediately began to examine its contents.
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, although we have not been able to find any record of any email or phone contact with him. We are still looking.
Restrictions on the use of the HSBC Suisse list
Update: On 25 February 2015, HMRC announced in a Treasury Select Committee hearing that the French authorities have formally agreed that HMRC can share stolen HSBC Suisse customer account data with other law enforcement agencies and regulators.
HMRC received the HSBC data under very strict international treaty conditions, which limited our use of it only to pursuing tax offences. We accepted these conditions on the basis that it was better to have data with restricted use than no data at all.
The conditions prevented us from sharing the data with other law enforcement authorities or for using it to investigate non-tax offences, such as money laundering.
Our records show that since 2010 we have asked the French on several occasions for permission to use the data for purposes wider than tax collection. As the data is now in the public domain, the French have confirmed that they will provide all assistance necessary to us.
We are awaiting formal written confirmation from the French that they will alter the conditions to allow its wider use by HMRC and have already started discussions with other UK law enforcement agencies about exploiting it.
We have also requested copies of the data from The Guardian, BBC Panorama and the International Consortium of Investigative Journalists, in order to compare it with ours, and we are in discussions with the French authorities to find out if there is any additional data that we have not already been given.
What other countries did with the HSBC Suisse list
We work very closely with our international partners, and we believe that they have taken a similar approach to HMRC. And as far as we are 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. The UK is not out of step with our international partners.