Taxman Targets 6,000 HSBC Swiss bank accounts holders

HM Revenue & Customs announced today that they will very shortly be writing to UK resident individuals and organisations that have bank accounts with the Swiss arm of HSBC in Geneva, and who may not have declared all of their income or gains to the taxman.

Last year HMRC obtained information under a tax treaty.  It has been rumoured that an employee of HSBC had stolen data relating to 6,000 UK residents who had bank accounts with HSBC Switzerland. This information, along with other data, had been sold to the German tax authorities.  It was then passed to HMRC in the UK.  The information relates to bank accounts held in the Geneva branch of HSBC by more than 6,000 UK individuals, companies, trusts and other entities: who held either bank accounts or other financial investments in Geneva via HSBC.

Last year HMRC began its investigations into these account holders in earnest.  About 500 UK citizens were taken up for investigation under the Civil Investigation of Fraud (CIF) procedures using the HMRC Code of Practice 9 (COP 9: Cases of Suspected Serious Fraud).  These investigations were carried out by the elite Specialist Investigations arm of HM Revenue and Customs.  In addition to those serious civil investigations about half a dozen individuals were arrested, and are now been subject to criminal prosecutions.  HMRC have promised that further prosecutions will follow shortly.

It is believed that a large number of individuals have come forward to make voluntary disclosures to HMRC.  Many of these have been able to obtain a guaranteed non-prosecution by using the Liechtenstein Disclosure Facility (LDF).  Despite its name the LDF, as it is known, is available to almost all UK residents who held offshore bank accounts at the relevant date; even if there was no prior connection to Liechtenstein itself.

HMRC is now adopting a carrot and stick approach.  It is writing to the 6,000 people who have not come forward so far.  It is offering them a last opportunity to make a voluntary disclosure.  The taxman states that there will be a limited ‘window of opportunity’ for such people to step forward. After that HMRC will commence investigations in earnest.   The taxman has stated that he is seriously considering launching criminal investigations into large numbers of those who do not come forward.  People who do not come forward now to make voluntary disclosures and are subject to civil investigations could face: penalties of up to 200% of the tax lost; “naming and shaming”; and placing on the Managing Deliberate Defaulters programme for the next five years.

The work will be led by HMRC’s new Offshore Co-ordination Unit, which becomes fully operational next month.  This all follows hot on the heels of a new tax agreement between UK and Switzerland – signed this month – which will give HMRC access to secret Swiss bank data for the first time ever.  That will be in addition to the information they already have regarding the HSBC accounts.

The taxman was keen to emphasise that:  “This is not an amnesty. There are no special rates of penalty or interest for those who come forward voluntarily. This is an opportunity for those who have made errors in past returns to correct them”.

However, HMRC has also accepted that anyone who comes forward prior to receiving Code of Practice 9, or being taken up for criminal investigation, will still be eligible to register for the Liechtenstein Disclosure Facility.  This is a proper tax amnesty.  It limits the number of years which HMRC can collect tax for, and offers a drastically reduced penalty, as well as a guaranteed immunity from prosecution, along with a simplified disclosure regime.

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