Banks look to fend off HMRC’s offensive on overseas accounts

Advisers are working feverishly to help banks’ clients who are considering appealing against the taxman’s foray into their accounts.

The workload for tax experts has picked up dramatically as 308 banks frantically assess their options on HM Revenue & Customs’ notice against them to provide details of their customers’ overseas accounts.

The flurry of activity came before the deadline to lodge an appeal against the notices passed on 21 September.

Stephen Camm, lead partner in tax investigations at PricewaterhouseCoopers said: “We’ve had quite a few banking clients talking to us about [the notices]. They’re looking to see how we can help them get the balance right between maintaining customer confidentiality and co-operating with the Revenue. Inevitably some will appeal the notices.”

One leading tax lawyer said 95% of his clients had been looking at issuing protective appeals to keep HMRC at bay.

However the only legitimate ground of appeal is that it would be “unduly onerous” for the bank in terms of collating the information to comply with the notice.

As part of the offensive, HMRC is also targeting institutions that have processed payments and transfers on behalf of their clients to overseas bank accounts, including accounts held with other organisations. The notices have been issued in generic form.

With the added burden of the “one size fits all approach”, compliance would be a “complete nightmare” for some banks, the legal expert said.

The banks could quite rightly feel hard done by, he added. They were not given any advance notice of HMRC’s plans to proceed against them, and they also had no opportunity to approach the tax tribunal before the application was made by the taxman.

HMRC said it was giving companies every chance to comply by rolling out guidance. A spokesman said: “Although the notices were granted on 308 banks this time, the legislation we used is the same as that used for previous successful notices.

“HMRC is providing all recipients of the notices with material to explain this and to help them to understand what they need to do. The first part of that material has already been sent out.”

IN OUR VIEW

HMRC is rightly going after UK citizens hiding undeclared income in cushy overseas jurisdictions, but the amount of information it will have to wade through may become a millstone round its neck.