HMRC’s offshore tax evasion unit has secured its first conviction, following on from a controversial episode involving HSBC’s Swiss division.


Michael Shanly, a millionaire property developer from Berkshire, has paid a total of more than £850,000 in tax, penalties and interest on an undisclosed Swiss bank account. This follows on his companies having to pay £1.5 million in back taxes in 2008.


Mr Shanly was among 6,000 UK citizens who attracted the attention of HMRC when they featured on a list of HSBC bank account holders in Geneva, stolen in 2010 by an HSBC employee and passed to HMRC by the French authorities after the employee fled to that country.


The case gives rise to a number of questions, such as:


  1. Is it legitimate for HMRC to use information obtained in such a manner and from such a source?


To my mind, unequivocally yes. I have no sympathy for tax evaders who complain about dubious means of bringing them to account, given that they chose to deliberately ignore their UK tax responsibilities in the first place, in order to achieve significant financial gain at the cost of the rest of the UK taxpaying population. Given that HMRC is apparently in contact with another 1,000 names on the list, we can presumably expect a lot more cases of this kind to come to court shortly.


  1. Where on the continuum of more or less nefarious tax exploits does this lie?


Right at the most serious end; what Mr Shanly did was illegal, whereas the likes of Jimmy Carr are operating within the law, even if what they have done is morally questionable. The UK tax system has to operate on the basis of taxpayer honesty.


  1. How come Mr Shanly didn’t finish up being imprisoned?


This would have been a genuine concern for the taxpayer in such a case, but he was presumably helped by the fact that he could afford to pay the tax etc in full, and as a millionaire was presumably able to afford a good barrister! He also pleaded guilty, which presumably earned him some mitigation of sentence.


  1. Is HMRC sufficiently well resourced to pursue all the cases arising from such information?


I would have thought debatable in the light of current staff and resources cuts taking place in HMRC; it may be that only the higher value cases will end up being pursued, which would be a very bad signal indeed to send to taxpayers. To my mind zero tolerance of tax evasion is the correct policy, and whilst initiatives to encourage voluntary disclosure of tax evasion have had some positive effect, I consider that HMRC should be sufficiently well resourced to pursue either on a civil or criminal basis all cases if tax evasion that it encounters.


Finally, you have to ponder the mentality of someone as rich as the taxpayer in this case who blatantly disregards his UK tax obligations and relies on the hitherto legendary impenetrability of the Swiss banking system to conceal his criminal activity. Whilst I took some issue with Lily Allen describing Jimmy Carr’s activities as 100 times worse than a benefit cheat, if she chose to say this about Mr Shanly and his ilk, I could not find it in my heart to disagree with her.