UK's HMRC Orders Banks To Disclose Offshore Accounts

by Jason Gorringe, Tax-News.com, London

14 August 2009

The Tax Chamber of the First-tier Tribunal has ordered over 300 banks to give details to the UK tax authority, HM Revenue and Customs (HMRC), about their customers who hold offshore accounts.

The ruling, announced on August 12, allows HMRC to issue information notices to banks ahead of the offshore income disclosure scheme, known as the New Disclosure Opportunity (NDO), which will allow people with unpaid taxes linked to offshore accounts or assets to settle their tax liabilities at a favorable penalty rate.

HMRC said it will use information obtained from banks to “ensure everyone pays the right tax and to check that NDO disclosures are complete.”

Under the NDO, those who make a complete and accurate disclosure between September 1, 2009 and March 12, 2010, will qualify for a 10% penalty. Those who do not to take part in the scheme and are subsequently found to have undeclared tax liabilities are likely to face a 30% or higher penalty and also run an increased risk of criminal prosecution.

As a result of HMRC’s last offshore amnesty scheme, 2007’s Offshore Disclosure Facility (ODF), some 60,000 individuals were said to have come forward. Undisclosed tax liabilities declared to the ODF were also subject to a maximum penalty of 10% of the outstanding tax (in addition to paying the total tax and interest due). About GBP400m in additional tax was raised by the ODF, which targeted the customers of five UK banks, but a more ambitious revenue target of GBP2bn has been set for the 2009/10 NDO.

Those to whom HMRC wrote to in 2007 offering the 10% penalty rate but did not complete the ODF procedure will suffer a penalty of 20% if they disclose under the NDO.

Stephen Timms, Financial Secretary to the Treasury, said the ruling represents “real progress in creating a level playing field for all taxpayers."

"It is wrong that some people evade paying their fair share of tax by hiding assets in offshore accounts,” he claimed.

Dave Hartnett, HMRC Permanent Secretary for Tax, commented: “Today we have successfully applied to get information on the offshore accounts and assets of customers of over 300 further banks. I urge any of them who have unpaid tax liabilities connected to these accounts now or in the past to come forward and make a full disclosure during the NDO because we will use the information provided by the 300 banks to pursue those people who continue to flout the UK’s tax laws.”

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