Tax officials faced a new storm today as evidence emerged they are letting dozens of wealthy tax-dodgers escape criminal prosecution.
The “long-standing approach” was revealed as it emerged that at least a dozen recent cases involving rich people suspected of illegal evasion were dropped.
A spokesman for HM Revenue & Customs confirmed to the Evening Standard that criminal proceedings are only taken in “a small number of cases” because of a long-standing policy of hitting offenders with cash penalties instead.
It means that wealthy people who try to cheat the Exchequer can escape without a conviction staining their name - in contrast to other offenders such as benefit cheats and people who do not pay their TV licence.
The stance was revealed because senior HMRC official Edward Troup gave evidence to MPs in 2012 in which he assured them that although only one person had been successfully prosecuted, there were more cases coming up. He said: “We have had one so far. We have got another dozen criminal ones in train.”
Labour wrote to Chancellor George Osborne demanding a statement on whether there was “a selective prosecution policy” towards cases related to disgraced bank HSBC.
“Can you explain why only a single prosecution has been made given the scale if the alleged wrongdoing and what role ministers played,” said Shabana Mahmood, the shadow exchequer secretary.
Public Accounts Committee chair Margaret Hodge said: “If these tax cheats were so-called benefit ‘scroungers’ they would be pursued with the full force of the law.”
A spokesman for HMRC said there was “a long-standing approach to tax evasion” which was to use heavy civil penalties to make evaders change their ways.
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“Overwhelmingly, this means providing disclosure facilities to encourage tax evaders to sort out their tax affairs, backed by civil penalties to fine them for the offence,” said the spokesman.
“In a small number of cases, we will institute criminal investigations into serial tax evaders and those who deliberately conceal information from us. But in most cases, disclosure and civil fines are the most appropriate and effective intervention, and that is how we have approached the receipt of data from leaks and whistleblowers, including the Swiss HSBC data that was shared with HMRC in May 2010.
“HMRC has systematically worked through all the HSBC data that we received, and has brought in more than £135 million in tax, interest and penalties from tax evaders who hid their assets in Swiss HSBC accounts.”
Labour is also demanding when the Treasury was informed of the HSBC scandal and why David Cameron went on to appoint the firmer bank boss Lord Green as a Trade Minister.
Downing Street defended the lack of prosecutions, saying that previous governments had taken the same view.
No 10 insisted no ministers “had any knowledge” about alleged impropriety involving the Swiss banking arm of HSBC until recent days. Nor were they briefed by HMRC about what it knew from 2010 onwards. However, critics pointed out that the bank was fined in America last year over the scandal, begging the question why UK ministers did not ask.
