The UK tax regulator, HMRC, has secured its
first conviction using data linked to the theft of clients’
accounts from HSBC Private Bank in Switzerland in March 2010.
Property developer Michael Shanly, who is
estimated to be worth £157m ($243m), was found guilty of tax
avoidance on July 4 at Wood Green Crown Court, London in the first
successful case of its kind.
Shanly has been ordered to pay HMRC a total of
£830,000 in fines and compensation, as well as costs.
Shanly, who pleaded guilty in the trial, was
found to owe HMRC £1.5m in unpaid tax during a civil inquiry when
it was revealed that he had a secret HSBC bank account in
He opened the account with his own and his
mother’s money, but following the death of his mother he
transferred all the money out of the account to a charity. As a
result Mr Shanly avoided paying £435,000 in inheritance tax, HMRC
First of its kind
The conviction was the direct result of the
theft of an estimated 15,000 client accounts from HSBC Private Bank
in Switzerland in March 2010.
That year, client account details, dating back
to 2005 and 2006, were passed to French authorities after Hervé
Falciani, a former employee of the bank, handed over information
stored on his laptop.
HMRC obtained the offshore HSBC bank account
data through a tax exchange agreement with France in April 2010
disclosing offshore accounts for more than 5,000 high net worth
(HNW) UK investors.
HMRC sent letters to 4,500 of these investors
in September 2011 asking them to choose between disclosing their
untaxed assets and facing investigation.
More convictions likely to
On failure to disclose the assets HRMC said it
opened the investigation that exposed the extent of the unpaid
Shanly’s lawyer, Matt Bosworth, challenged the
statement made by HMRC, claiming that the money in the account all
belonged to Shanly’s mother. Bosworth added that the funds were
transferred to the children’s charity Terre des Hommes.
Bosworth also said that of the £830,000 owed
to HMRC, £387,103 had already been paid.
HMRC said criminal investigators continue to
review the information obtained on the HSBC client accounts and
further prosecutions are likely.