LORD Fink, the former Tory treasurer, has challenged Ed Miliband to repeat claims about the peer's tax record outside the legal protection of the House of Commons as the political row over the HSBC tax evasion scandal intensified.
A list of donors to the Conservatives and Labour, who had accounts with the Swiss arm of HSBC - which is under fire for allegedly helping some of its clients evade tax - fuelled a heated exchange during Prime Minister's Questions.
In a furious clash between David Cameron and Mr Miliband, the Labour leader singled out the Tory peer, saying: "Let us take Stanley Fink, who gave three million pounds to the Conservative party. The Prime Minister actually appointed him as Treasurer of the party and gave him a peerage for good measure. Will he now explain what steps he is going to take about the tax avoidance activities of Lord Fink?"
The Conservative peer responded in a letter by saying the Labour leader's assertion was "untrue and defamatory" and, in a clear threat of libel action, told Mr Miliband: "I challenge you to repeat your allegation outside the House of Commons or to withdraw it publicly."
The tax evasion row could now develop further as it emerged HM Revenue and Customs will meet with Scotland Yard and the Serious Fraud Office later this week to consider whether or not to expand its inquiries into HSBC.
Of more than 6000 names understood to have been passed to HMRC, UK tax authorities say they have pursued around 1100, recovering some £135m in unpaid tax, fines and interest.
In furious clashes at PMQs, Mr Miliband told MPs the Tory donors named on the HSBC list had given the Conservative Party more than five million pounds. He accused Mr Cameron of being "up to his neck" in the tax evasion scandal, telling him: "You're a dodgy Prime Minister surrounded by dodgy donors".
Mr Cameron was asked four times by MPs if he had had talks with Lord Green - the ex-HSBC chief whom he appointed a Trade Minister - but, on each occasion, he ducked the question, saying only that "every proper process" had been followed in the Conservative peer's appointment.
But the Prime Minister hit back, stressing how Lord Green had been on Gordon Brown's business advisory council and pointing out how onetime 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.
He accused Mr Miliband of being controlled by trade union donations and said the previous Labour Government had been the "friend of the tax dodger".
Later, 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. In October 2011, HMRC issued a press release naming the bank with a comment from David Gauke, the Treasury Minister.
The party source noted: "Four times the Prime Minister was asked about Stephen Green, four times he refused to answer. It beggars belief that David Cameron didn't know about these allegations. These are very serious questions we are expecting an answer to them today."
In a separate development, Lin Homer, the Permanent Secretary at HMRC, was grilled by the Commons Public Accounts Committee when an angry Margaret Hodge, the Chairwoman, asked her: "You knew about the allegations of evasion and you didn't think to tell the Prime Minister about it?"
Ms Homer stressed HMRC had no responsibility to report direct to Mr Cameron on individuals' tax affairs.
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