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OFFSHORE TAX EVASION PROBE
THE fight against offshore tax evasion has been stepped up with four high street banks being made to hand over details of their clients' offshore bank accounts.
The Financial Times has reported that details of approximately 100,000 customers of HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB will be disclosed to Revenue and Customs in an action expected to produce 275m in unpaid tax.
Tax officials in the UK are now searching records for information on UK-domiciled individuals who have not declared income on money kept in offshore centres.
The action is thought unlikely to force the disclosure of secret bank accounts in Switzerland and some other offshore jurisdictions.
Island-based Phil O'Shea, president of the Association of Licensed Banks and chief executive of Close Bank, said it was not clear whether this ruling included the Isle of Man.
'It is still speculation who the banks are at the moment but there has been some discussion that HMRC are undertaking an amnesty — and are inviting people who haven't made a declaration to do so before a certain date.
'This is still a rumour and not confirmed as yet. At Close Bank we don't encourage business that isn't of the highest quality. It's not really clear at the moment how the situation will develop.'
Paul Hotchkiss, senior tax manager at KPMG in the Island, said: 'The FT's stab at naming the banks is pure speculation. HMRC approached the Special Commissioners for these rulings and these decisions were anonymous.
'Therefore we may never officially know the identity of the banks concerned unless they themselves put the information into the public domain.
'The identity of the banks does not matter – it is not the banks' responsibility to complete a UK individual's self assessment return. This responsibility rests with the individual. However, what is of concern is that there will be a number of customers, who quite legitimately hold bank accounts overseas, who will run the risk of unnecessary (and potentially time consuming] HMRC enquiries. This is the problem with this type of blanket approach but it is difficult to see how else they can locate these individuals who are not properly disclosing and paying tax on overseas bank interest.'
Mr Hotchkiss continued: 'The jurisdictions which may be affected by these rulings are likely to be directly related to the bank or banks concerned ie if a "targeted" bank has a branch or subsidiary in the Isle of Man then some of its customers are not likely to come under scrutiny.
'Of course, it must be borne in mind that this ruling does not "force" any offshore bank to provide information. What it does is to force the UK bank to provide information on customers with offshore bank accounts where that customer's information is in the UK bank's possession – there is a difference.'
Malcolm Couch, the Island's Assessor of Income Tax, said: 'HMRC only has jurisdiction over UK operations and information and doesn't have a right to access information in the Isle of Man. It really depends on how the bank or organisation is structured – if they have a branch overseas they can access this information. However they do not have an automatic right to information outside the UK.
'If people are declaring their income there should be no fear about this information being given. We will be monitoring the situation very closely but it looks like the UK is currently moving within it's legal context.'
Under the new proposals, investors will be given six weeks to disclose the existence of an offshore account, with a further four months to make a complete disclosure and pay the tax bill.
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Weather for Isle of Man
Saturday 04 February 2012
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Heavy showers
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