The taxman has widened the reach of its anticipated second crackdown on
offshore accounts to target
trusts and partnerships, as well as individuals.
This week HM
Revenue & Customs revealed the first 30 banks have received letters
requesting details of customers suspected of holding undeclared funds offshore.
Accountancy Age has learned that among those to receive letters are
the Bank of Cyprus and the Bank of India. Around 500 institutions are expected
to be included in HMRC’s second amnesty or offshore disclosure facility
which seeks to recover tax on interest generated by funds held overseas by UK
Last week it emerged the terms of the second amnesty mean account holders are
likely to pay a penalty of 30% of tax owed, if they come forward to declare
A copy of the letter sent to the Bank of India was dated 27 February 2009 and
was issued by HMRC’s offshore accounts department on Merseyside. It is
understood the same letter was sent to the Bank of Cyprus and the other banks in
the group of 30.
The letter said: ‘Based on evidence in our possession about some of your
customers, HMRC is considering an application to the Special Commissioner… for
consent to issue a notice to you under Section 20 (98A) of the Taxes Management
The letters requests a meeting with bank officials and outlines the legal
procedure HMRC will take in securing bank account details. It also requests
information on how the banks are structured and documents relating to UK
customers ‘holding offshore accounts and investment vehicles.’
An HMRC spokesman confirmed it has issued 30 institutions with the letter but
would not disclose their identity.
He said there was yet to be a response from any of the banks and declined to
say how many accounts HMRC is likely to scrutinise.
The one-page letter is accompanied by several pages outlining the legislation
in the Finance Act 2008 and HMRC’s powers in obtaining information and
documentation from customers of the banks.
By sending the letter, HMRC is thought to be attempting to avoid the need for
a legal order forcing disclosure by the banks under a new tribunal system
launching on 1 April.
‘The reason HMRC is doing this is to avoid a challenge and smooth it through
on a voluntary basis or tee it up before they have to use their statutory
powers. The new system is fraught with danger… it’s yet to be tested,’ a source
close to bank customers said.
The first amnesty in 2007 netted £400m and targeted an estimated 100,000
taxpayers with accounts in the five major retail banks.
Bank of India and Bank of Cyprus had not returned calls as Accountancy
Age went to press.
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