UK Politics

Danny Alexander calls for corporate tax evasion crackdown

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Media captionDanny Alexander: "Organisations who facilitate or encourage evasion should face the same financial penalty as evaders themselves"

Companies that fail to prevent tax evasion could face penalties as part of plans announced by Danny Alexander.

The Liberal Democrat chief secretary to the treasury aims to introduce a new offence for firms that fail to act to prevent economic crime.

Mr Alexander told the Andrew Marr show he wants organisations that encourage or facilitate tax evasion to face the same penalties as evaders themselves.

The proposed crackdown comes in the wake of HSBC tax-dodging allegations.

It emerged earlier this month that the bank had allegedly helped hundreds of people evade UK tax using hidden HSBC accounts in Geneva.

Former director of public prosecutions Lord Ken Macdonald said the bank had left itself open to criminal charges in the UK and there were strong grounds to investigate the bank for "cheating" HM Revenue and Customs.

He added that HMRC's decision not to prosecute was "seriously flawed".

'Tough disincentive'

Mr Alexander said: "We should create a new offence of corporate failure to avoid preventing an economic crime and also that organisations who facilitate or encourage evasion should face the same penalty as the evaders themselves."

He described it as a "Liberal Democrat idea" but intends to try to push the proposals through before May's general election.

If he cannot, they will form a key part of the Lib Dem manifesto.

"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," he added.


Analysis by business correspondent Joe Lynam

There's been more comment about facilitating tax evasion in the fortnight since the Panorama programme on HSBC than in the five years before that.

Danny Alexander's new plan to make it a crime for banks and accountants to look the other way while their clients knowingly evade tax may appear to be a populist reaction - very late in the life of this coalition. The public may feel it's better late than never though.

They see benefit fraudsters brought before the courts and small firms harangued by the tax man for modest VAT bills while giant firms and high net worth individuals know it's unlikely they'll be prosecuted for not paying all their taxes.

Making the professional advisers pay the same fine as their clients will also send a chill down the spine of many of the big four accountants and all of the banks.

Danny Alexander concedes it might be a big ask to get a new law through Parliament making inaction in the face of tax evasion a crime but the Lib Dems will try. He says there's a much better chance of bolting on the financial penalties side of his proposal to next month's Budget though. And he may even get cross-party support.


'Broken promises'

Mr Alexander continued: "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."

Image copyright Reuters
Image caption Danny Alexander's comments come in the wake of the HSBC tax avoidance claims

The Lib Dems said they would make a commitment to see the "tax gap" - the difference between the total owed to the Exchequer and the amount collected - fall in each year of the next Parliament.

The party would also strengthen codes of practice which apply to tax-advising professions.

Mr Alexander said in a statement that "these cheats and their accomplices are effectively stealing from all of us", adding: "These new measures will build on the successful strategy that is making tax evasion as socially unacceptable as benefit fiddling or drinking and driving."

Chris Leslie, shadow chief secretary to the Treasury, said: "Nobody will believe these warm words when Danny Alexander and the Lib Dems have broken their promises on tax.

"Along with the Tories they have totally failed to tackle tax avoidance and cut taxes for millionaires while raising VAT on families and pensioners."

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