15,000 Offshore Account Holders Targeted In HMRC Tax Probe

by Jason Gorringe, Tax-News.com, London

25 January 2006

Around 15,000 people can expect to be on the receiving end of an investigation by HM Revenue and Customs into unpaid taxes relating to bank and credit card accounts held offshore, as a result of a decision by an Inland Revenue Tribunal earlier this month.

The ruling made against a leading financial institution, which came after an appeal by the HM Revenue and Customs Special Civil Investigations Offshore Fraud Projects Group, means that the department will be able to serve formal notices on the institution in question requesting information about its customers' offshore accounts, under section 20 of the 1970 Taxes Management Act.

The unnamed institution, thought to be a well-known high street bank, had tried to argue that the Revenue's request for information was incompatible with the Human Rights Act, a claim which commissioner John Avery Jones rejected.

A sample analysis of the bank's account holders suggests that only 19% of those with UK addresses and holding offshore debit/credit cards declared their income on tax returns, while only 18% declared foreign income.

The sample showed that the largest number of offshore debit and credit cards were linked to accounts in the Channel Islands and the Isle of Man.

Credit cards associated with offshore accounts can be used either to draw money in the UK from ATMs, or sums charged to the card in the UK can be paid from the offshore account. HMRC considers that this presents a significant risk to the proper collection of UK tax.

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