HSBC is under siege as governments around the world launch criminal investigations into allegations the bank’s Swiss private banking branch helped 100,000 wealthy clients evade their taxes.
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Fraud investigators in the US, France, Belgium and Argentina are building cases against the bank.
The case dates back to 2010 when HSBC computer programmer Herve Falciani downloaded details of the accounts and passed the information to tax authorities in the UK, France and Germany.
HM Revenue & Customs (HMRC) has chased down 6,000 taxpayers suspected of hiding their assets offshore with the help of the bank to avoid paying tax in Britain.
As a result, £135 million in lost tax has been repaid, says HMRC.
One taxpayer has been prosecuted for tax evasion.
HMRC slammed
The approach in the UK has differed from other countries because HMRC argues recouping the lost tax is cheaper and more effective than mounting a criminal prosecution against the bank.
“Our experience is these investigations are lengthy and costly,” said an HMRC spokesman. “We believe the way we have handled the affair gives a better result to taxpayers and is more effective than prosecuting the bank.
“Preparing and pursuing a court case can take years.”
This approach has been criticised by MPs who believe HMRC and the government should have taken a sterner stand against HSBC.
“The authorities have been too weak,” said Margaret Hodge, who chairs the Public Accounts Committee in Parliament.
The allegations claim HSBC either ignored or gave advice to clients on how to evade paying tax on cash and investments held offshore.
No more banking secrecy
Holding an offshore account does not automatically mean a taxpayer is evading tax, providing they declare any interest or gains on their assets and pay the right amount of tax due.
However, the bank is accused of helping many customers hide the true state of their financial affairs from tax authorities around the world. Much of the activity involved shell companies set up to shroud customer’s names in secrecy on the tiny Pacific island of Niue.
HSBC said offshore banking in Switzerland had dropped banking secrecy and no longer helped customers avoid their taxes.
“Many Swiss banks were run differently years ago, and many, including HSBC co-operate fully with tax authorities around the world,” said a spokesman.
The bank also explained nearly three-quarters of clients no longer had accounts with the Swiss branch and that ‘strict guidelines’ relating to tax advice are now in place.
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