Exclusive: Taxman pursues blanket bank disclosure notice

A single ‘blanket’ notice forcing all banks to disclose details of customers with offshore accounts is being sought by HM Revenue and Customs in a controversial attempt to avoid the need to seek separate orders for hundreds of banks.

A successful application to the Tax Tribunal will legally obligate banks to supply details of overseas account holders.

The blanket approach is expected to be rebuffed by banks and tax advisers, who argue if HMRC is successful in obtaining the order, it will place banks on a ‘conveyor belt’.

This is the latest stage in HMRC’s second offshore amnesty targeting 500 banks. The first, launched in 2007, recovered £400m in unpaid tax on interest accrued overseas. It involved just five high street banks and targeted 100,000 account holders.

Advisers reacted with anger and confusion to the latest measures. One said: ‘It can’t be a one-size-fits-all approach to very different banks and financial institutions around the country with different products and accounts. Whether the industry can stomach that I don’t know.’

According to Steve Besford, tax associate at BDO Stoy Hayward, there is currently no capacity under new information powers which would allow HMRC to obtain a blanket order. ‘It’s confusing in those terms that the revenue thinks it could cover every conceivable bank,’ he said.

Despite his doubts that HMRC could avoid seeking separate orders for each institution, Besford said the taxman gained confidence after winning arguments with Tax Tribunal judge John Avery Jones during applications in March involving four banks. ‘From this, I can see how HMRC would think it can issue a notice to each and every bank in their sights on the grounds that all the arguments put forward by institutions previously targeted have been defeated,’ he said.

The taxman estimates it will recover up to £18m from account holders at the four banks now targeted by disclosure notices. Individuals who fail to come forward with their tax liabilities could face a penalty of 30% of the unpaid tax.

A spokesman for HMRC said: ‘It’s kind of like a class action. We’ve made it clear that we’re going to do this ­ it’s now just a matter of finessing the detail. It doesn’t make sense to go one, two, three when we’re dealing with hundreds,’ he said.

It remains unclear when the order, or notice, application will be made, but a source close to the planning of the request said the case is expected to be heard before the Tax Tribunal ‘in the next few weeks.’

Facts/figures:

500: numbers of banks that could be covered by a blanket notice

£18m: amount HMRC expects it will recover from four banks targeted so far