Customs, has written to some 170 private banks, brokerages and
building societies with proposals for investigating offshore
accounts held with them by UK residents.
This fresh initiative follows a disappointing outcome to the UK’s
offshore disclosure facility, essentially a tax amnesty, conducted
earlier this year. Only 55,000 taxpayers responded to the amnesty
out of as many as 3 million with offshore accounts. It is estimated
that tax has still not been declared on at least 100,000
accounts.
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HMRC, in its letter, set out its ideas for a new investigation
based around a questionnaire on banks’ offshore clients.
Institutions that have offshore businesses and information on
offshore account holders “with UK addresses” that is accessible in
the UK will fall within the scope of the new investigation.
Under its proposals, HMRC will seek documentation in the UK which
banks either have “possession of, or power over”. Information on
account balances dating back six years will be required. This will
include any know your customer or due diligence documentation
obtained at the opening of any non-UK account as well as data
relating to any deposits into or withdrawals from the non-UK
account.
HMRC is also seeking to inquire into the types of documentation
that client relationship managers have for their customers, past or
present, who hold or have held any non-UK bank account.
The latest offshore initiative is being led by Martin Sellar,
assistant director at HMRC. He has been “aggressively pursuing” the
department’s offshore campaign, according to London bankers.
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By GlobalDataHMRC last year took legal action, via Section 20(8A) of the Taxes
Management Act 1970, to force the five big UK banks – Barclays,
HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB – to disclose
details of their offshore account holders.
However, there is unlikely to be extensive voluntary co-operation
from the private banking industry because of its need to preserve
maximum client confidentiality, bankers say.
The new HMRC letter seems to acknowledge this. If a bank is unable
to comply voluntarily due to client confidentiality, the
institution could provide the data requested if a formal notice –
under the provisions of Section 20 powers – is put in place, it
noted. Then, the banks will be subject to Special Tax
Commissioner’s hearings, which HMRC says will be case managed,
aggregated and arranged in the most effective way.
“There will be no legal or administrative cost issues raised and,
for the avoidance of doubt, HMRC will not seek legal costs,” its
letter promises.
HMRC declares that its proposed approach will ensure a “consistent
industry approach” to the investigation. It will also ultimately
protect the confidentiality of the institutions, giving them “the
cover of a formal notice while simplifying and streamlining the
process which should reduce costs” of compliance.
Under an HMRC timetable, 1 December has been set as the deadline
for assessing the full scope of the investigation.
