HMRC threatened with legal action over HSBC tax ‘loopholes’

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The online campaigning organisation Avaaz issued this press release over night:

HMRC threatened with legal action over HSBC tax ‘loopholes’

*Avaaz calls for judicial review over misuse of amnesty, as 950,000 join campaign*

HMRC is facing potential legal action for failing to prosecute British taxpayers listed in the HSBC tax scandal. Tax officials could face judicial review over decisions taken to offer Swiss bank account holders an amnesty deal designed to encourage unknown tax dodgers to come in from the cold, not as a mechanism to deal with those caught out by the system.

Lawyers acting on behalf of the global campaigning movement Avaaz have sent a pre-action letter to HMRC demanding details of why the Liechtenstein Disclosure Facility (LDF), an amnesty aimed at allowing tax-dodgers to bring hidden wealth into the tax system, was offered to those HMRC knew about on the HSBC lists. This is the first step towards a possible judicial review of HMRC’s actions.

The LDF aims to encourage tax evaders to declare hidden money by offering favourable terms and immunity from prosecution if they come forward. But HMRC boss Lin Homer told Parliament that those caught out by the HSBC leaks were ‘encouraged’ to claim the amnesty rather than face prosecution.

Alex Wilks, Avaaz Campaign Director, said: “If the police extended the terms of knife amnesties to criminals caught carrying weapons, the public would be outraged. Tax officials must urgently explain why they gave get out of jail free cards to so many wealthy tax dodgers.”  

Jolyon Maugham QC of Devereux Chambers, acting on behalf of Avaaz, said: "The conduct of HMRC’s handling of the HSBC leaks has attracted huge public and Parliamentary interest. The High Court should now have the opportunity to scrutinise what tax officials did and didn't do."

The letter calls on HMRC to explain why the LDF was offered to tax-dodgers named in the HSBC files, instead of bringing more punitive action against them. The UK has brought just one prosecution out of the thousands of British citizens named in the Swissleaks. By contrast other countries whose taxpayers were named in the leaks have brought a series of prosecutions, and last week Arlette Ricci was jailed in France for tax evasion.

The letter comes after more than 950,000 people around the world signed a petition calling for investigations and prosecutions of wealthy tax evaders. The pre-action letter was prepared by the legal firm Leigh Day on behalf of Avaaz. HMRC now has 30 days to reply. 

To see the full letter:

There is more on this in the Guardian, here.

I warmly welcome this move, and the entry of Jolyon Maugham into the fray. It is time HMRC's top management realised they are accountable.

Of course, an Office for Tax Responsibility would be better still.