[Closed] Banker bashing Monday!

Widening out the criticism of banking and tax dodging, to a larger one about the state of our economy generally, this is a great article by Will Hutton in yesterdays Guardian. Its difficult to argue with any of it. Though I'm sure some contributors to this thread would regard it as heresy, or communism 😕

[url= http://www.theguardian.com/business/2015/feb/11/british-capitalism-broken-how-to-fix-it ]British capitalism is broken. Here’s how to fix it. The country is heading towards a social and economic crisis marked by desperately high levels of inequality. But it’s not too late to create a fairer society in which most people flourish[/url]

[i]We live in a country whose banking system seven years ago was only saved by a £1tn intervention, and that remains crippled by the legacy of private debt and stunning losses. Months ago, the secession of Scotland, which threatened to break up the foundations of the state, was narrowly avoided; it remains an ongoing threat. Our share of world markets continues to shrink, and our trade deficit has climbed to unthinkable levels. Wages have fallen, in real terms, by the greatest degree in more than a century. Inequality of income and wealth have risen to desperately high levels that may soon metastasise into a serious economic and social cancer.

Yet what is most extraordinary about the present moment is that all this now seems unexceptional; our political and economic order is so thoroughly broken that many no longer find that fact worthy of notice.[/i]

i think jamby's final line ^^ is nicely complementary with binners last quoted line up there ^

TBH i use jam as a litmus test, if he agrees with me I need to re-evaluate my opinions as I must be wrong.

I have yet to find a subject where his view matches the facts and as ernie notes his principles are flexible to fit his mood /argument at the moment.

Will Hutton (as always) shows a challenged (!) understanding of both history and economics.

The low number of prosecutions is a scandal - reflects limited resources more than desire

We need to clearly separate bank bashing (which is silly) with banker bashing (which is more justified). Many bankers remain in denial about their behaviour, salaries, regulation etc. This needs to change.

On income inequality, a great study recently compared the exposure of economies to financial services versus levels of income inequality. The causation there holds up to more scrutiny than the usual it's capitalism fault narrative that doesn't. On that basis, the extent of reliance in fin services deserves scrutiny.

the extent of reliance in fin services deserves scrutiny.

thats a shame because im not aware of any party that proposes anything different, except maybe the greens?

Why do you think that tax dodging and money laundering activities shouldn't be treated as corruption ? You don't find this curious impotence to dishonest and fraudulent behaviour in Crown Dependencies strange ?

I don't but most of these jurisdictions have anti-money laundering regimes and many have information sharing provisions. They are not impotent. However the unscrupulous will still take advantage if they can as they do in every state.

The EU stuff have always been there, the French have the same.

I was being overly succinct because it was past my bedtime, the point I was making is that there is nothing unusual in sticking up for your former colonies and in the case of the French I was thinking about bananas!

Many bankers remain in denial about their behaviour, salaries, regulation etc. This needs to change.

And how will it change? As none of them are being, or have been, held accountable for their immoral or criminal behaviour. I doubt thats going to change any time soon.

In fact, not only is there absolutely no sanction at all, whatever they've been up to, they are (even more) richly rewarded for it! (Sir) Fred Goodwin waltzing off, enormous pension intact, after bringing down RBS, being the prime example. 'Lord' Green being made a government trade Minister, despite HMRC knowledge of his dodgy 'Tax Efficiency' schemes. There are plenty more examples! Though no examples of any of them being hauled to account for any of it. Not one!!!

Its like having a petulant child, that instead of being challenged about their behaviour, is just constantly indulged instead.

Its business as usual in the City, in case you hadn't noticed

Nice way of looking at it Binners

Bankers are the UK petulant child princess who will strop off if we make any demands of them so we just throw more sweets at them hoping it all works out.

despite HMRC

knowledge of his dodgy 'Tax Efficiency' schemes.

Its how camerons dad made all his money - he was a hugely successful tax avoider legal off shore scheme runner

http://www.theguardian.com/politics/2012/apr/20/cameron-family-tax-havens

No meaning to ad hom here but i seriously doubt dave thinks its wrong or immoral or even a bit Un british to do this and just says it for the camera

TBH i use jam as a litmus test, if he agrees with me I need to re-evaluate my opinions as I must be wrong.

thats a shame because im not aware of any party that proposes anything different, except maybe the greens?

I am all for broadening the UK's economic base, we are indeed far too focused on financial services. However, lets create new stuff before we destroy too much of the old. We rescued the banks not for the bankers but for the broader economy, for all those businesses which survive on their bank overdraft facilities.

Let's get the bonus word in there while we are at it shall we. Russel Brand loves to talk about £80bn in bankers bonus, well that's £48bn in tax and national insurance collected though PAYE by HMRC

Fred Goodwin was a very very poor chief executive, likewise the management teams at Northern Rock and Halifax Bank of Scotland. But they didn't do anything illegal.

Income inequality and wages. We need to acknowledge that there are billions of people in India and Asia which are undercutting wages at the bottom and increasingly middle end of our economy. You can't address that by taxing "the rich" to reduce inequality in the UK. I also think that the loss 100,000's of well paid banking jobs in the last 5 years has had a material impact on average earnings. The press don't focus on this but Barclays cut 3,000 jobs last year of people paid (I would guess) an average of £250k pa, that's just one bank and there are many similar stories. This impacts average stats significantly.

I personally think that focussing on the super rich / bankers is a very convenient way for the rest of us to consciously ignore the fact that tax evasion (as a pose to avoidance) is rampant at all levels of our society, and that we all need to pay a fair share in order to fund high quality public services.

Just out of the people I know, there are hundreds of thousands of income that haven’t been declared in recent years, and the convenient prevailing assumption by everyone I know is that they don’t need to do self assessment for second sources of income unless HMRC asks them. The people below aren't super rich - they are "normal" people at least two of whom work in public services.

Neighbour 1: secured a part buy / part rent social housing flat designed for key workers, lived in it for 2 years then moved out and rented it for around 5 years for around £1500 a month. Neither the rental income or the capital gain was declared – total undeclared income around £190K

Neighbour 2: secured a part buy / part rent social housing flat designed for key workers, lived in it for 2 years then moved out and rented it for around 8 years for around £1700 a month before moving back in. Total undeclared income around £142K

Sister of neighbour 1: lives on benefits but inherited £200K last year. She’s still on benefits but hasn’t ever told them about the inheritance.

Father of neighbour 2: was on Disability Benefits but working. He got caught and had to repay the £37K he defrauded, but still hasn’t declared the 10 years of income from working, or the £1500 a month for the same period he made from renting rooms out in his house. Total undeclared income: £380K

Uncle of neighbour 2: runs a building firm. He gets clients to pay final balances into the bank account of his nephew so they don’t show up in his accounts. He’s running a regular balance of undeclared income of £50K+.

Old neighbour 3: a doctor. Has rented out his penthouse flat for more than 10 years. The current rent is close to £2700 a month. Total income not declared: around £275K

Old Uni mate: generates income in excess of £50K a month through his business. For several years he cashed cheques made out to “Bob Jones Ltd” through a personal account in Jersey. He just crossed out the “ltd” and effectively hid the income. Total undeclared income: £240K.

And the above list doesn’t even reflect the majority of neighbours who are renting rooms and paying tradesmen in cash to avoid VAT – the list above represents income tax of around £4-500K that should have been paid –enough to pay for 7 teachers for a year.

Tax evasion is something most of us are aware of in our day to day lives – as much as the “super rich” make easy targets the uncomfortable truth is that many of the people in our streets / families are actively evading tax.

JY it's totally legal to create an offshore trust (or company as that's a less controversial name) and then pay people (your kids, grandkids) an income. That income is taxable where they receive it, in Camerons case in the UK.

I have no intention after a lifetime of paying 40% plus tax of having the government take another 40%-50% in inheritance tax. If that's what the rules say when I approach my dotage, I will live and die elsewhere thanks very much and leave a whatever legacy remains to my kids and grandkids.

@just5 - I agree entirely. I do allow myself to get very wound up by all this stuff as having an income received totally via PAYE I pay plenty then hear about how the "rich" and "bankers" should be paying their fair share.

it's totally legal to create an offshore trust

he was a hugely successful tax avoider legal off shore scheme runner

The irony algorithm is working fine today but its still struggling with facts 😉
Its legal but immoral IMHO

just5minutes......

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/reporting-tax-evasion

If I lived next door to just5minutes, I'd be padlocking my rubbish bins 🙂

On the subject of tax evasion by buy-to-letters, I don't think anyone would argue that they shouldn't be paying the tax that is due. You do wonder though what the tax authorities are doing to chase these people. On a wider point I suppose it's the obvious result of the rentier economy that has been created by successive govts. There are thousands of people out there who are effectively running businesses who have no idea what they're doing. And without wanting to make excuses for them, I bet a lot of these people don't even know they're supposed to be paying tax on their rental income.

this is why no one is prosecuted for what is now in the press - the Government and HMRC introduced a disclosure facility whereby you pay a much reduced tax rate if you "come clean". It also removes the possibility of criminal prosecution.

https://www.gov.uk/government/publications/offshore-disclosure-facilites-liechtenstein

much reduced tax rate

penalty rate not tax rate but this is certainly one of the reasons.

On the subject of tax evasion by buy-to-letters, I don't think anyone would argue that they shouldn't be paying the tax that is due. You do wonder though what the tax authorities are doing to chase these people

considering that MPs seem to have been well practised at house flipping etc and that such a high % of them are BTL landlords themselves, Im not sure theyd welcome too much scrutiny of the area

not to mention that many middle class landlords would suddenly be under scrutiny, thats not good in an election year

Guardian desperate to keep the headlines coming on their exclusive [url= http://www.theguardian.com/business/2015/feb/12/lord-fink-tax-avoidance-is-normal-in-british-society ]Tax Avoidance is Normal in Biritsh Society[/url]

Of course it is, its normal to have an ISA or a pension. Fink lived on Switzerland for 4 years he's perfectly entitled to create a family trust. What a non-story

What a non-story

It's such a "non-story" that you decided to draw attention to it, when no one else had, and provide a direct link to it.

check out this advice from another amoral dodgy tory......

nice assessment of londons finance markets here, some mind boggle quotes

[url= http://neweconomicperspectives.org/2015/02/city-london-criminogenic-boggles-even-banking-apologists.html ]http://neweconomicperspectives.org/2015/02/city-london-criminogenic-boggles-even-banking-apologists.html[/url]

I feel a bit sorry for HMRC in all of this. They are asked to collect taxes based on an unbelievably complicated set of rules set up by the government of the day. Or more likely just added to by the government of the day. Then when they go about their business of implementing the rules the governement has and no doubt still does interveen in specific cases. It also keeps cutting the budget they have to collect the taxes due and investigate

I wouldnt feel that sorry for HMRC

The Guardian has established that Her Majesty’s Revenue and Customs confirmed only Green’s personal compliance with UK tax laws while clearing him for the peerage. It did not inform the government that it was in possession of thousands of secret account files from the Swiss bank, which implicated HSBC in major tax evasion and other potential criminal offences.

Asked why he took no steps to pass on the allegations contained on the so-called “Swiss disc”, Dave Hartnett, HMRC’s then head of tax, said: “HMRC is asked to provide an indication of reputational risk for appointments of peers in relation to their tax compliance history only.”

Hartnett played a key role in shaping HMRC’s handling of the Swiss data, which had been passed to the UK by the French tax authorities. He went on to work for HSBC as a consultant when he retired in 2012.

Already mentioned this:

UK's lax approach may also be due to the fact that a good chunk of the world's Tax Havens are under the jurisdiction of the Queen, as British Overseas Territories, Crown Dependencies and Commonwealth Realms

[url= http://www.financialsecrecyindex.com/faq/britishconnection ]But the plot thickens...[/url]

Given the Queen rules many of the world's Tax Havens and the relatively short terms of democratically elected representatives of Her Majesty's government, could this go beyond party politics?

“HMRC is asked to provide an indication of reputational risk for appointments of peers in relation to their tax compliance history only.”

If that's true then they did what was asked of them. If the government wanted to know HMRC's opinion of HSBC then they should have asked for it.

And why didn't the government ask, since they intended to make HSBC's Group Chairman a peer of the realm ?

It's not the responsibility of HMRC to volunteer information which they haven't been requested to give.

If the government really cared whether Stephen Green was a person fit to receive a peerage then they would have carried out all the necessary checks. The responsibility lay with them. It wasn't HMRC that awarded him with a peerage.

I feel hugely uncomfortable that HMRC should be used as a scapegoat for the government's failures.

Why was cameron so determined to avoid/evade answering whetehr hed asked Green about his tax affairs at HSBC?

"If that's true then they did what was asked of them. If the government wanted to know HMRC's opinion of HSBC then they should have asked for it."

But on what basis could HMRC have given a qualified opinion?

HMRC is not responsible for regulating banks in the UK, let alone UK banks with substantial overseas operations - it's also highly debatable whether HSBCs global auditors could have given a qualified opinion either - the decisions on "black" accounts seemed to have been made locally in Switzerland.

"implicated in" is such a catch all phrase. 88% of the accounts where not worthy of scrutiny as they where totally legitimate, eg Swiss accounts for Brits living abroad/in Switzerland. then we have 1,000 accounts to investigate and so far we have £135m in tax/penalties paid and 13 cases under review by the SFO/prosecution.

The reason nothing was done in 2008/9 when the "whistleblower" first contacted HMRC was that he wanted to be paid for the list and HMRC refused to do so therefore the details where not sent to them. The guy didn't steal evidence of tax evasion he simply stole all the account records

BTW Ed Milliband used a tax avoidance technique upon the death of his father to avoid IHT. He's boasted he paid capital gains tax but that was a much smaller amount than the IHT would have been. This is an old story dating back 5+ years FYI

From the Guardian today. [url= http://www.theguardian.com/world/2015/feb/13/hsbc-files-crackdown-on-amnesty-deal-for-swiss-banks-spanish-customers ]link[/url]

Spain had 600 names on the HSBC list and has collected £192m from 300 of these under an amnesty (ie pay your tax, no prosecution). The Botin family alone accounted for £150m of this.

The reason nothing was done in 2008/9 when the "whistleblower" first contacted HMRC was that he wanted to be paid for the list and HMRC refused to do so therefore the details where not sent to them. The guy didn't steal evidence of tax evasion he simply stole all the account records

but Lin Homer of HMRC said specifically that they had no knowledge of the list

But on what basis could HMRC have given a qualified opinion?

Well how about the government asking HMRC the following question : "We're considering giving Stephen Green a peerage, you've told us that as far as you are concerned his tax history is fine, but what about HSBC, he is group chairman, are you happy with HSBC?"

To which HMRC could have replied : "Well our colleagues in France have provided us with information of thousands of secret account files which implicates HSBC in major tax evasion activities and other potential criminal offences".

David Cameron could then have concluded that it was perhaps not a good idea to give Stephen Green a peerage until all investigations had been exhausted and HSBC had been exonerated.

If he cared.

But David Cameron has a past record concerning poor judgement, has he not ?

@ernie - its not news that HSBC Switzerland (or indeed any other bank out there) will have many UK account holders. The fact they exist doesn't implicate anyone in anything.

What the Whistleblower did was provide a list of names of account holders with their nationality.

Not sure what Lin Homer or anyone at HMRC knew of he initial contact, the Whistleblower apparently has dug out an email he sent but HMRC say they have no record of it (it may have been deleted as a matter of course after a few months for example).

What we have is £125m of tax collected, I assume a liability over many years. Its far far less than the amounts dodged by companies as a result of EU tax treaties every year. We keep hearing about these massive amounts in the billions not being paid and I imagine HMRC was focusing on chasing these eleusive amounts and not the relatively small amounts due from offshore accounts

You say [i]"@ernie"[/i] and yet nothing that follows bears any relation to the point that I've just made.

And the point was, in case you missed it, that had Cameron cared then he would have known that there was widespread, international in fact, dissatisfaction, with the way HSBC has in the past supported their extremely wealthy tax-dodging clients.

You used the words "implicated in major tax ..." in your hypothetical responce.

I am not sure there was international dissatisfaction with HSBC in Switzerland. I think you'll find every bank was offering pretty much the same services.

HSBC offered Swiss banking services to UK citizens, including pointing out ways in which they might pay less tax. That's normal business practice. If those same clients hid money in Switzerland and didn't declare it to the UK tax man when it should have been that's a criminal offense.

This is not a Swiss or an HSBC issue. Banking exists throughout the globe with varying different laws and levels of secrecy. HMRC and the other tax authorities need to work out how to do a better job here in the UK and they need changes in the law and tax policies to allow them to do so.

I am not sure there was international dissatisfaction with HSBC in Switzerland.

Well you wouldn't be would you? I suppose that you think the French tax authorities got in touch with their UK counterparts because they were completely satisfied with how the HSBC had been conducting their affairs and were merely interested in knowing whether the UK tax authorities were as satisfied as they were?

And this is what the HSBC themselves said in a statement :

[i]Although there are numerous legitimate reasons to have a Swiss bank account, in some cases individuals took advantage of bank secrecy to hold undeclared accounts. This resulted in private banks, including HSBC’s Swiss private bank, having a number of clients that may not have been fully compliant with their applicable tax obligations. We acknowledge and are accountable for past compliance and control failures.[/i]

So according to the HSBC themselves they [i]"acknowledge and are accountable for past compliance and control failures".[/i] This suggests a certain dissatisfaction with their own past activities, even though you apparently aren't dissatisfied jambalaya.

Although presumably you would be ranting with indignation if they were a Greek bank.

What was going on at HSBC Switzerland was not " normal banking practice" for the subsidiary of a UK bank, they seem to have been knowingly encouraging tax evasion, which is wrong.

Whether any UK authority had a complete picture of how complicit HSBC where when Green was appointed is another matter.

Well HMRC had the evidence of not "normal banking practice" 8 months before he was appointed Minister of State for Trade and Investment.

Still, I'm sure jambalaya will explain why that shouldn't be seen as a problem.

Told you that Rona Fairhead was in on it:

[img] [/img]

Still, I'm sure jambalaya will explain why that shouldn't be seen as a problem.

It seems from HMRC evidence that they knew that there were accounts where tax had been evaded, but that they were not aware of the emails that showed HSBC were complicit in that tax evasion.

You're not paying attention mefty, apparently this is a very old story which everyone has known about since 2007

jambalaya - Member

Breaking news from 2007.

As HSBC points out the rules have been tightened since 2007 and they are compliant with todays new rules.

EDIT : They certainly knew about HSBC dodgy banking practices before Cameron made Green Minister of State for Trade and Investment.

[url= http://www.theguardian.com/business/2015/feb/09/hsbc-files-hmrc-data-misconduct-stephen-green-trade-minister ]HSBC files: HMRC had data on misconduct before bank boss made trade minister[/url]

[i]I feel a bit sorry for HMRC in all of this. They are asked to collect taxes based on an unbelievably complicated set of rules set up by the government of the day. Or more likely just added to by the government of the day. Then when they go about their business of implementing the rules the governement has and no doubt still does interveen in specific cases. It also keeps cutting the budget they have to collect the taxes due and investigate [/i]

My Mum was a tax inspector in the 70's and 80's and she said it was no different then. And how can you expect mid-rank civil servants to compete with high-flying accountants/lawyers?

I have though been on the other side after a period of working abroad when I was let off a rather substantial sum (basically lost my job and had to come back mid-tax year with no money). But the Inspector said that if they held the letter of the law down then he could see that all I'd do was sign-on and they'd not get any money - far better to write it off and have me back working and paying tax. Plus he could see that it wasn't on purpose.

You're not paying attention mefty, apparently this is a very old story which everyone has known about since 2007

I give that poster the attention he deserves on this subject.

The Revenue had data but their evidence the other day implied this was limited to accounts details. That alone does not indicate wrongdoing by the bank. It is the emails that illustrate the wrongdoing (i.e. knowledge and encouragement of tax evasion) which it would appear from the HMRC evidence that they did not have access to.