Lib-Dems: Tax evasion advisers are criminals too

Chief Secretary to the Treasury Danny Alexander appears on The Andrew Marr Show. Picture: PA

BANKING giants that fail to prevent tax evasion would be subject to new hardline fines under a crackdown unveiled by Treasury Secretary Danny Alexander.

In an attempt the kick-start the Liberal Democrats’ ailing general election campaign, Mr Alexander announced plans for a new offence of “corporate failure to avoid preventing an economic crime”.

And despite flatlining polls, he said the Liberal Democrats will be the “comeback kids” in May’s election and insisted that he can hold on to his Highland seat.

Chancellor George Osborne came under fire last week for “washing his hands” of the HSBC scandal, following revelations that the bank helped wealthy clients avoid paying tax.

Mr Alexander said that organisations that encourage tax evasion, or make it easier for it to be carried out, face the same level of fine as the evaders.

He said he would try before May’s general election to see whether progress can be made on the idea. If not then it will become a key part of the Liberal Democrat manifesto, he added.

Mr Alexander said: “Organisations, be they accountants, banks or whatever, who help people evade tax will be liable for this new offence and crucially liable for financial penalties.

“So, for example, if their customers have to pay back hundreds of millions of pounds in tax then those organisations should have to match that with hundreds of millions of pounds of their own money and I think that’s a very tough disincentive to them to get involved in this in the first place.

“This is taboo. This is something that absolutely mustn’t happen in our society and we still have a problem with some people thinking they can get away without paying their fair share of tax.”

It emerged earlier this month that HSBC’s Swiss private bank had helped wealthy clients across the world evade hundreds of millions of pounds worth of tax. Leaked documents suggest this included almost 7,000 clients based in the UK.

HM Revenue and Customs (HMRC) chiefs will face a grilling from MPs this week over claims that its officials were alerted to the scandal, but failed to act.

Mr Alexander said the Liberal Democrat initiative would create a much stronger deterrent to companies helping tax dodgers.

He acknowledged that he faces a “tough battle” retaining his Highland seat in the face of surging SNP support but argued his role in the UK coalition government was helping his constituents.

Recent polls on Scottish voting intentions have put support for the Liberal Democrats at around 5 per cent, with Mr Alexander and East Dunbartonshire MP Jo Swinson among the high-profile figures who could lose their seats.

Asked whether he could win the Inverness, Nairn, Badenoch and Strathspey seat again, the Treasury Secretary said: “Yes I can. I think I’ve got a tough battle of course with the Nationalists but I’m doing a lot to support the Highlands through this government.

“More generally I think we Liberal Democrats will be the comeback kids in this election campaign because I think when people look at the choice they have – clueless Labour, heartless Tories – and they want to continue the recovery in the way that it’s going, you only get a strong economy and a fair society through the Lib Dems and I think that means a lot of our MPs, all of our MPs potentially, will hold their seats and we’ll gain more seats too.”

First Minister Nicola Sturgeon openly courted disenchanted Liberal Democrat voters at the weekend as she campaigned in East Dunbartonshire.

The SNP leader said Lib Dems are heading for “obscurity”, adding: “My message to disillusioned former Lib Dem voters is this – the SNP is here for you.”

Ms Sturgeon added: “On austerity, tuition fees, Trident renewal, Lords reform, and the NHS, they have backtracked and abandoned their principles. It is no wonder trust in the Lib Dems is at rock bottom.”

The Liberal Democrats said last night that their tax plan also includes making a commitment for the government to see the “tax gap” – the difference between the total tax owed to the Exchequer and the amount actually collected – fall in each year of the next parliament. Codes of practice applying to tax-advising professions would also be strengthened.

Mr Alexander added: “These new measures will build on the successful strategy that is making tax evasion as socially unacceptable as benefit fiddling or drinking and driving.”

Labour shadow chief secretary to the Treasury Chris Leslie said nobody will believe Mr Alexander’s “warm words” as the Liberal Democrats have “broken their promises on tax”.

The said: “Along with the Tories, they have totally failed to tackle tax avoidance and cut taxes for millionaires while raising VAT on families and pensioners. The amount of uncollected tax has gone up by £3 billion under Danny Alexander and George Osborne.

“This government has refused to close loopholes which Labour has highlighted. And ministers still need to explain why there has been just one prosecution out of 1,100 names in the HSBC case and why the head of the bank was made a Tory minister.”

Mr Leslie added Labour would have an immediate “root and branch” review of HMRC to ensure it is “up to the job”.

HMRC was given the leaked data in 2010 and has identified 1,100 people from the list of 7,000 British clients who had not paid their taxes. But almost five years later, only one tax evader has been prosecuted.

HMRC said £135 million in tax, interest and penalties have now been paid by those who hid their assets in Switzerland. HSBC has denied that account holders were evading tax.

It has admitted that it was “accountable for past control failures.” But it said it has now “fundamentally changed”.

The bank now faces criminal investigations in the US, France, Belgium and Argentina, but not in the UK, where HSBC is based. It has said it is “co-operating with relevant authorities”.