An ex-employee at HSBC Bank in America pleaded guilty this week to tax evasion in the USA after concealing his bank accounts with HSBC India and with HSBC British Virgin Islands (BVI). The case will have profound repercussions: strengthening the fast increasing ability of tax authorities to obtain previously secret information from banks around the globe.
Mr Vaibhav Dahake, of New Jersey, pleaded guilty this week to Conspiracy to Defraud the Internal Revenue Service (IRS), and to concealing undeclared bank accounts in India. He will be sentenced on 22 July. He faces a maximum sentence of 5 years in prison, plus a fine of US$250,000 or twice the amount of the tax evaded. In any event, he has already agreed to pay a Civil Penalty for failing to report foreign financial accounts (i.e. offshore bank accounts). That penalty is 50% of the amount of the balances on his undeclared offshore bank accounts for the years 2004-2009.
This is part of an ongoing investigation by the IRS into offshore banking practices. That investigation has so far focussed on UBS and HSBC but its tentacles appear to be spreading. The American taxman is gathering fresh evidence at quite a pace. It seems inevitable that much of that information will be shared with Her Majesty’s Revenue & Customs in the UK.
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