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11 February 2015

The HSBC tax scandal exposes a secretive industry serving a wealthy global elite

The chair of the Public Accounts Committee on HSBC's role in cheating the public purse, and why HMRC has some serious questions to answer.

By Margaret Hodge Margaret Hodge

The revelations about the role of Britain’s biggest bank in seemingly helping wealthy individuals avoid and potentially evade tax have shocked us all.

The Public Accounts Committee first raised the so-called Falciani list – the leaked names of 130,000 potential tax evaders using the Geneva branch of HSBC – with HMRC in July. HMRC admitted that although it had received a list of almost 7,000 names as long ago as May 2010, it had so far recouped only £130m and prosecuted just one individual.

We thought this was pathetic. The French and Spanish tax authorities had half the number of names handed to them and yet have recouped £200m and £180m respectively. HMRC’s line is that it focuses on recovering tax owed rather than prosecuting the offenders, but would you let a bankrobber go free in exchange for returning the money they had stolen? And while getting the money in is crucial, so is deterrence. If people can get away with it as long as they cough up, tax avoidance or even evasion is worth the risk.

Furthermore, HMRC has serious questions to answer about why it did not investigate at the time what role HSBC itself had played. There are very few reasons to have an undisclosed offshore bank account except to get out of paying tax. The very existence of all these accounts was a red flag that HSBC may at least be guilty of turning a blind eye. France, Belgium and Argentina are all prosecuting the bank and in America it is being investigated by the Department of Justice.

The documents revealed by Panorama, the Guardian and others this week offer strong evidence that, far from an innocent bystander, HSBC actively encouraged and helped its clients to dodge tax. In one particularly scandalous case, HSBC appears to have given the millionaire director of Stoke City Football Club and members of his family a credit card to access cash abroad from what the bankers knew was an undeclared Swiss bank account containing almost $2m.

These leaked files further expose a secretive industry serving a global elite. Compare the way these wealthy tax cheats are treated with the so-called benefit “scroungers” who are aggressively pursued through the UK courts.

Even if our tax authorities are prepared to let HSBC off the hook, we on the Public Accounts Committee are not. The bank must be held to account for its actions. That is why we are launching an urgent inquiry into tax practices at HSBC, and we will expect them to answer for their role in cheating the public purse out of hundreds of millions of pounds.

Margaret Hodge is chair of the Public Accounts Committee and Labour MP for Barking