George Osborne has promised a legal crackdown on banks that facilitate tax evasion, saying that he will use his Budget to combat practices exposed by the HSBC tax evasion scandal.
Banks, accountants and others who advise clients on how to evade tax could face penalties running to hundreds of millions of pounds.
The UK chancellor, answering Labour claims that the coalition has been soft on tax evaders, said: “This government is taking action and will do so again in the Budget.”
The Treasury wants to close a legal loophole where individuals can face civil penalties for tax evasion but the financial professionals that collude with them are not subject to the same punishment.
Mr Osborne’s Budget is expected to target “facilitators of tax evasion” although it is likely to focus on financial penalties rather than creating a new criminal offence. His allies said the idea was in gestation before news of the HSBC scandal broke.
Danny Alexander, the chancellor’s Liberal Democrat deputy, set out the Treasury’s thinking on Sunday, arguing that those who facilitate or encourage evasion should face the same financial penalty as the individual tax dodgers.
“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,” Mr Alexander told the BBC.
Meanwhile Mr Osborne also told MPs that he hoped talks with the French government about allowing leaked HSBC files to be passed to prosecuting authorities would soon come to “a fruitful end”.
Under a 2010 agreement France agreed to hand the files to HM Revenue & Customs only on the agreement that they were used to tackle tax avoidance and evasion, not to launch criminal prosecutions against any banks.
Mr Osborne said he hoped the French authorities would soon allow the HMRC to had over the files to “the Serious Fraud Office and other prosecuting authorities” to consider whether any prosecution should follow.
The chancellor was answering an “urgent question” in the Commons from Ed Balls, shadow chancellor, who claimed Mr Osborne had “something to hide” over the whole affair.
Mr Balls noted that Mr Osborne repeatedly failed to say whether he discussed the HSBC scandal with Lord Green, the bank’s former chief executive and chairman, after he was made a Tory peer and trade minister in 2011.
“George Osborne could not explain why only one person has been prosecuted out of 1,100 names,” Mr Balls said after the exchanges. “And he could not say why he signed a deal with Switzerland which could prevent HMRC from getting its hands on similar information in the future.”
Mr Balls added: “George Osborne has been chancellor for five years since the government first received these files in May 2010. He cannot duck responsibility for his failure to act or for the appointment of Lord Green as a Tory minister after the government received evidence of wrongdoing.”