PM faces questions over tax links

Labour has demanded the Prime Minister makes clear whether he talked to former HSBC boss Lord Green about tax-dodging allegations linked to the bank before appointing him to his Government or during his three years as trade minister.

Ed Miliband repeatedly sought to force an answer from Mr Cameron at Prime Minister’s Questions in the Commons, with the PM responding by saying that “every proper process” was followed in the appointment.

Mr Miliband said that a list of clients at HSBC’s Swiss subsidiary included a string of Tory supporters who had between them given the Conservative Party more than £5m, and branded Mr Cameron a “dodgy Prime Minister surrounded by dodgy donors” who was “up to his neck” in the HSBC tax avoidance scandal,

But the Prime Minister hit back, pointing out Labour donor Lord Paul - who now sits as a crossbencher - had also been named as holding an account at the Swiss bank branch at the heart of the controversy.

And he insisted: “When I appointed Stephen Green, every proper process was followed. I consulted the Cabinet Secretary, I consulted the director for propriety and ethics, and the House of Lords Appointments Commission now looks at someone’s individual tax affairs before giving them a peerage.”

Labour said Mr Cameron had “refused to answer” the key question of whether he personally challenged Lord Green at the time of his appointment in January 2011 over how much he knew about activities in HSBC’s Geneva office, which is facing allegations that staff encouraged customers to dodge tax.

A senior Labour source pointed out that details of thousands of UK-based clients were handed to HMRC in May 2010 and press reports that HSBC was involved appeared in September.

The Guardian published a list of nine Conservative donors who it said were listed in the files relating to clients of HSBC’s Swiss subsidiary.

The newspaper stated that the accounts were held legally for a wide variety of reasons, and made no allegation of wrongdoing against those listed.

Of more than 6,000 names understood to have been passed to HMRC, UK tax authorities say they have pursued around 1,100, recovering £135m in unpaid tax, fines and interest.

Mr Miliband said that none of those named had paid “a penny” to Labour on his watch. Referring to Mr Cameron, he told MPs: “There is something rotten at the heart of the Tory Party and it’s him.”

Mr Cameron responded: “When people donate to the Conservative Party they don’t pick the candidates, they don’t choose the policies, they don’t elect the leader.

“When the trade unions fund the Labour Party they pay for the candidates, they pay for the policies, and the only reason you are sitting there is because a bunch of trade union leaders decided you were more left wing than your brother.”

The clash came as the head of HM Revenue and Customs, Lin Homer, faced difficult session before the Public Accounts Committee.

Chairwoman Margaret Hodge said at the meeting that tax authorities have failed to serve taxpayers’ interests in their response to the leak of a massive cache of data relating to secret Swiss bank accounts.