George Osborne has washed his hands of responsibility for prosecutions against people who evaded tax through HSBC Switzerland, as the government came under pressure to justify immunity deals given to those who confess to serious tax fraud.

More than a week after the scandal first broke, the chancellor said the allegations against HSBC and its clients were very serious but such decisions were a matter for the prosecuting authorities – a principle that has been “one of the bulwarks of freedom in this country for hundreds of years”.

“I don’t think it would be right – and actually when you pause to think about it I think most people would agree – I don’t think it would be right for a chancellor of the exchequer to direct prosecutions against individuals or individual companies,” he told an audience at the Tate on the Southbank in London.

HM Revenue and Customs, which is overseen by the chancellor, has been criticised by Ed Balls, Labour’s shadow chancellor, over its “selective prosecution” policy in which it has prioritised collecting money from tax evaders, rather than pursuing criminal cases. Only one person has been prosecuted so far out of more than 1,000 account holders at the HSBC Swiss subsidiary who were suspected of trying to hide money from the taxman.

Although ministers are independent of prosecuting authorities, they are responsible for setting policy around who should be pursued.

Following criticism of HMRC’s handling of the affair, David Gauke, the financial secretary to the treasury, last night pointed out that the same principle was in place under Gordon Brown, who laid out rules as chancellor in 2002 saying the then Inland Revenue would “accept a money settlement and will not pursue a criminal prosecution, if the taxpayer, in response to being given a copy of this statement by an authorised officer, makes a full and complete confession of all tax irregularities”.

Gauke said Labour had “blundered” by not realising this predated the coalition to the time of the last government.

According to lawyers at Pinsent Masons, the principle that those suspected of tax crimes avoid prosecution if they confess dates back even further than that, to a statement made by Sir William Joynson-Hicks, then financial secretary to the Treasury, in 1923.

Over the years, the tax authorities have had various degrees of discretion over whether to pursue prosecutions. But the most recent HMRC guidelines, from 2012, allow suspected tax fraudsters 60 days in which to make a full disclosure and cooperate or face a criminal investigation.

Downing Street has so far refused to hold an inquiry into HMRC’s decisions or review its prosecution policy following revelations by the Guardian, the BBC and international media outlets about the extent of evasion by clients of the HSBC Swiss subsidiary and the bank’s role in enabling this to happen.



Defending HMRC, Osborne claimed prosecutions for tax evasion have gone up on the coalition’s watch and pointed out he has previously said he wanted to see more prosecutions for tax evasion. He said: “We resourced HMRC accordingly and as a result prosecutions are up fivefold.”

Chris Leslie, Labour’s shadow chief secretary to the Treasury, said Osborne had “finally emerged, but he still hasn’t answered any of the key questions over the HSBC scandal”.

The chancellor has still not replied directly to a letter from Balls demanding that he explain his knowledge of the conduct of HSBC’s Swiss subsidiary and the extent to which the Treasury was aware that HMRC was taking a light-touch approach to seeking prosecutions for those suspected of tax evasion. It also asked about the government’s decision to hire Lord Green, the former global boss of HSBC, as a trade minister.



A YouGov survey for the Times Red Box found 62% of people want the chancellor to answer these questions.

Gauke said the Swiss deal had raised £1.2bn for the taxpayer and Labour welcomed it at the time.

In an interview with Sky News in the last week, in which he was asked about the tax leak, Osborne did not make any direct comment on HSBC but said it was a “cardinal rule as chancellor not to get involved in or know the details of any individual’s or any individual company’s tax affairs”.

HMRC is likely to be be quizzed further about its prosecution policy on Wednesday when Lin Homer, its chief executive, and several top officials appear before the Commons Treasury committee. Douglas Flint, chairman of HSBC Holdings, will also be giving evidence.

On top of that, HSBC will be braced for questions about the affair when it reports its 2014 results on Monday and reveals how much its boss Stuart Gulliver received last year. The former head of the investment bank, his pay has come in at around £8m annually since he was promoted to run the bank in 2011 and this year includes a £1.7m allowance which he receives as a result of the EU cap on bonuses. The cap limits bonuses to the equivalent of their salary, or twice that amount if shareholders approve.

The bank will also publish how many of its staff were paid more than £1m.