Treasury refuses MPs' request for information on the Government's work on closing tax loopholes

Ed Miliband promises inquiry into avoidance, as former HSBC boss Lord Green resigns City post

Ed Miliband at the Welsh Labour conference on Saturday (Getty)

Ed Miliband yesterday committed Labour to holding an urgent review of HMRC’s approach to tax avoidance if it wins the election in May. The news comes as The Independent on Sunday learned that the Treasury has turned down requests from Parliament’s Public Accounts Committee to keep it informed of the Government’s work on closing tax loopholes.

There has been condemnation of the failure of HM Revenue and Customs (HMRC) over the HSBC scandal. Only one Briton with an account at HSBC’s Swiss private bank has been prosecuted. HMRC recouped £135m from accounts linked to Britons, far less than their French and Spanish counterparts.

However, Treasury ministers and officials rejected a Public Accounts Committee report which argued that HMRC “does not do enough” to tackle companies that exploit international tax structures in order to minimise UK tax.

Its response was drafted before last week’s disclosure that HSBC’s Swiss subsidiary had helped clients avoid millions of pounds in tax, but the timing of the Treasury’s robust defence of HMRC’s competence is embarrassing.

Richard Bacon, a senior Conservative MP on the committee, said: “If they [the Treasury and HMRC] believe that HMRC is doing enough, they are the only people on the planet who believe that. Certainly in their own jurisdiction they aren’t doing enough.”

The HSBC tax evasion files are just the tip of a probable mountain of tax avoidance hidden in tax havens around the world (Getty)

The minutes were published two days after the committee accused the chief executive of HMRC, Lin Homer, of “not serving the British taxpayer” in its handling of the scandal. The MPs had wanted updates on any progress made by Treasury and HMRC on finding and tackling the way that international tax structures are organised. They also called for detailed information on the costs and benefits of recent changes to the UK’s tax regime.

The Treasury replied that it “disagrees” with the committee’s recommendations, and listed recent measures to deal with tax avoidance. These include the “diverted profits tax”, which will charge a 25 per cent levy on profit shifted from the UK under “contrived arrangements”.

A Treasury spokesman said: “We’re absolutely clear that companies that do business here should pay their fair share of tax, which is why we’ve taken a number of steps since 2010 to tackle multinational tax avoidance, including leading global efforts to reform the international corporate tax rules, and the diverted profits tax.”

Mr Miliband announced his plans for a statutory inquiry into HMRC’s culture and practices in a speech to the Welsh Labour conference in Swansea. The inquiry would focus on HMRC’s approach to tax evasion and avoidance and its relationship with people being investigated.

A Conservative spokesman responded: “The culture and practices of HMRC went wrong under Labour, when top bankers paid lower tax rates than their cleaners, foreigners didn’t pay capital gains tax, and the richest people routinely avoided paying stamp duty.”

Labour’s move follows a claim by BBC Panorama that HMRC failed to prosecute a wealthy property developer who did not pay tax or submit returns for 20 years. Mr Miliband told activists: “While this Government has had five years of inaction, we will begin from the first days we are in government and it will report within three months. We will ensure we are a country where there is responsibility from top to bottom.” He accused the Government of presiding over a £34bn gulf between the tax due and the amount collected.

Stephen Green, former chief executive of HSBC, was made a Conservative life peer in 2010 (AFP/Getty)

The Labour leader insisted he would not be cowed by attacks on him over the issue, which continued yesterday with fresh accusations that he minimised his tax liability in property dealing. The party said any suggestion of tax avoidance by Mr Miliband was a “straightforward lie”, and demanded an apology over the report in the Daily Mail.

Lord Green, the former HSBC chief, announced yesterday he was stepping down with immediate effect from his latest senior position in the City. The former Tory minister quit as chairman of the advisory council of TheCityUK, a financial services industry body.

Sir Gerry Grimstone, chairman of its board, said: “Stephen Green is a man of great personal integrity who has given huge service to his country and the City. He doesn’t want to damage the effectiveness of TheCityUK in promoting good governance and doing the right thing, so has decided to step aside. This is entirely his own decision.”