HMRC calls in police and SFO on HSBC leak data
Amid all the political theatre of today's clash between Margaret Hodge, the chairwoman of the Public Accounts Committee, and Lin Homer, the chief executive of HMRC, there was some significant substance.
First, HMRC has now revealed it is looking to expand the scope of its investigation and is meeting other law enforcement agencies later this week.
Sources tell me that HMRC is likely to meet both the Serious Fraud Office and the police. Jennie Grainger, HMRC's director general of enforcement, told MPs that they wanted to "collaborate" with other agencies.
If the SFO and the police launch separate investigations, that would be a serious escalation for HSBC. The bank says that it has reformed the operations of its Swiss private banking arm and standards of compliance are now much higher.
Second, HMRC will also look at money laundering in connection with the HSBC data following discussions with the French authorities earlier this week.
Third, HMRC initially believed that up to 150 of the people on the HSBC data list could face criminal prosecutions.
By the time it had investigated each of these people - a process that, Ms Homer revealed, can take an average of 44 months - only three cases were handed on to the Crown Prosecution Service.
The CPS agreed that one of those three should proceed to prosecution - a case that was successful.
Ms Homer said that revealed how difficult and expensive it was to bring criminal cases.
Ms Grainger said: "It is very difficult to prosecute from offshore. One of the challenges - and particularly in a situation when you have stolen data, which is what this is - is that you have to be able to prove those facts another way in order for the CPS to be able to take it forward."
Ms Homer agreed: "We would have liked to have seen more prosecutions if we could have met the threshold."
All of this explains why HMRC has a preference for the civil route when it comes to tax avoidance or evasion, where penalties can include fines of up to 200% of the amount of tax that has to be repaid.
Mrs Hodge wasn't impressed, describing the approach as "pathetic" and not in the best interests of the British taxpayer.