Exclusive: Taxman pursues blanket bank disclosure notice

HMRC headquarters

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

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

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.’


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

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

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