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Labour really isn’t going to let the Tories off the hook about tax avoidance. Ed Balls wrote a letter to George Osborne today, outlining what he considers to be the main issues. Here’s the text of that letter in full. Feel free to compare and contrast with the interpretations in the mass media.

Dear George,

It has now been over a week since the full story about tax evasion and HSBC became public. There are a number of questions which you have failed to answer over the last eight days and which cannot continue to be brushed under the carpet:

1. Why has there only been one prosecution out of 1,100 names? Was the “selective prosecution policy” a decision made by Ministers?

Detailed information was passed to this government in May 2010 about 1,100 HSBC clients allegedly guilty of tax evasion or avoidance and yet since then there has been just one prosecution.

In November 2012 a senior HMRC official told The Times that the government had adopted “a selective prosecution policy” towards cases related to HSBC. Later that month HMRC told the Public Accounts Committee that “another dozen” criminal prosecutions were to follow. However, there have been none since.

Given the scale of the alleged wrongdoing, can you explain why only one prosecution has been made and what role Ministers played in deciding on “a selective prosecution policy” for those accused of tax evasion? People would expect you to have been either involved in, or at least aware of, a decision of this seriousness.

Why did the Financial Secretary to the Treasury claim in the House of Commons last week that the government was provided this data “under very strict conditions”, when the French Finance Minister has since suggested otherwise?

2. When were you first made aware of these files, what action did you take and did you discuss it with the Prime Minister?

While a Downing Street spokesperson claimed last week that “no government minister” had any knowledge of what happened at HSBC, the Chief Executive of HMRC has since revealed that Ministers were in fact informed about these files after they were received:

“We are confident we will have told Ministers that we were about to receive a big tranche of operational information,” she said. “We will have told people, including Ministers, I suspect some time in the next few months [after the data was received].”
Lin Homer, Chief Executive HMRC, Public Accounts Committee, 11 February 2015

When were you and Treasury Ministers first made aware of these files and did you take any action as a result? If not, what were the reasons for this inaction? Did you ever discuss this with the Prime Minister?

3. Why did you and David Cameron appoint Lord Green as a Conservative peer and Minister months after the government received these files?

Lord Stephen Green was Chairman of HSBC 2006-2010 and was appointed a Conservative Peer in September 2010 and then as Trade Minister by David Cameron in January 2011.

This was several months after the government was given information from the French government in May 2010. There had also been extensive public coverage of this investigation since 2010.

For example, on 26 September 2010, the Sunday Telegraph reported that HMRC is investigating more than 200 “extremely wealthy” British taxpayers suspected of tax evasion totalling “many millions of pounds”.  It adds that they are “believed to have failed to declare huge sums of interest from private deposit accounts with HSBC’s bank in Switzerland.” (Sunday Telegraph, 26 September 2010,http://www.telegraph.co.uk/finance/personalfinance/expat-money/8025527/HMRC-launches-tax-evasion-probe-into-Swiss-account-holders.html).

Why was Lord Green appointed months after the government had this information? Can you provide details of the due diligence carried out by the government in advance of Lord Green’s appointment?

4. Did you and David Cameron discuss tax evasion at HSBC with Lord Green, or did you turn a blind eye? Did you discuss allegations of money laundering at HSBC during Lord Green’s time at HSBC which led to the bank being fined $1.9bn?

Did you or Treasury Ministers ever discuss what happened at HSBC with Lord Green in the almost three years in which he was a Conservative Minister? The Prime Minister failed to answer this question four times in the House of Commons last week.

Did you or Treasury Ministers ever discuss allegations of money laundering at HSBC during Lord Green’s time in charge of the bank, which first became public in July 2012 following an investigation by the US Senate Homeland Security Sub Committee and which led to the bank being fined $1.9bn in December 2012? When were you and Treasury Ministers first made aware of the findings of this inquiry?

If you or your Ministers did not ever raise any of these issues with Lord Green while he was a Minister or before his appointment, would this not be remiss given the scale of wrongdoing which you would have been aware of?

5. Why did you sign a deal with the Swiss authorities in 2012 which prevents the UK from actively obtaining similar information in the future?

The Swiss tax deal, which you heralded in the 2012 Autumn Statement, has not only raised a fraction of the sums promised, it also seems to tie the hands of HMRC and the UK government for the future. The following declaration was made by the Treasury:

Declaration of the United Kingdom concerning the acquisition of customer data stolen from Swiss banks:
The Government of the United Kingdom declares on the occasion of the signing of the Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation on cooperation in the area of taxation that it will not actively seek to acquire customer data stolen from Swiss banks.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/356884/declaration-acquisition.pdf

This deal means that the government may never again be able to get hold of the sort of information it received in 2010 about tax evasion and which is at the centre of this scandal. This deal was also made while Lord Green was a Conservative Minister and years after this government was first given information about tax evasion in May 2010.

Why did you sign this declaration and what advice were you given about how it would impede HMRC and the government’s ability to act in the future?

Did Lord Green have any involvement in the Swiss tax deal while he was a Trade Minister and did he ever give any advice to the Treasury on it?

Given the significant public interest in this matter, I am making this letter public. It is notable that you have not given any live broadcast interviews or given a statement in the House of Commons on this issue. However, these questions cannot continue to be ignored and I look forward to hearing from you.

Yours sincerely,

Ed Balls

Follow me on Twitter: @MidWalesMike

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