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HMRC targets HSBC Geneva acccount holders

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HMRC’s new Offshore Co-ordination Unit is to write to UK residents and organisations holding bank accounts with HSBC in Geneva who may have undisclosed tax liabilties.

A week after the UK and Swiss governments signed a deal to tackle tax evasion by British investors, HMRC announced that it had already begun criminal and serious fraud investigations into more than 500 individuals and organisations.

Many others had taken advantage of HMRC’s Liechtenstein Disclosure Facility, a special arrangement that will run until March 2015, HMRC said.

The taxpayers’ identities were contained in data stolen from HSBC by a former employee and obtained by HMRC from France under the terms of a tax treaty.

More than 6,000 individuals, companies, trusts and other bodies held accounts and investments with HSBC Geneva, the department said.

‘HMRC will shortly be writing to those who have not yet come forward, or are not currently under investigation. They will be offered a window of opportunity to contact HMRC and disclose all their tax liabilities. If they do not come forward, HMRC will begin an investigation into their affairs, which could include a criminal investigation or result in penalties, in certain circumstances, of up to 200%.’

An HMRC spokesman confirmed that the taxpayers will be given 30 days to notify the department that they intend to make a disclosure.

Dave Hartnett, Permanent Secretary for Tax, said: ‘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. The net is closing on offshore evaders. Don’t wait for HMRC to contact you. Come forward to us and make a full disclosure.’ 

‘Under the terms of the UK Swiss tax deal, the [HMRC] letters themselves remove the recipients from that agreement,’ the ICAEW Tax Faculty noted.

Ben Jones, an Associate at Eversheds, said the UK government states ‘continually seems to pursue the path of least resistance through offering evaders the opportunity to avail themselves of amnesties, disclosure facilities and anonymity-maintaining tax agreements’.

It was questionable, he said, whether such arrangememnts represented an effective deterrent against evasion. ‘The UK needs to follow the lead of the US and commit to prosecuting evaders to the fullest extent of the law, regardless of cost and time.’

Phil Berwick, Director at McGrigors, said some tax evaders may have seen the UK-Swiss tax deal as setting a deadline for sorting out their tax affairs.

‘Rather than starting serious fraud investigations, taxpayers are being given an opportunity to come forward.  For many, the best route will be the Liechtenstein Disclosure Facility, which offers immunity from prosecution for tax offences, and favourable settlement terms.’

He said HMRC’s announcement was intended as ‘a strong signal’ that the deal was only one part of its efforts to clamp down on evasion. ‘This aggressive approach tells those who are hoping that they have a year to tidy up their tax affairs that the net may already be closing in on them. For many, it will come as a very nasty surprise.’

The Swiss deal has been criticised ‘for undermining European Union’s drive towards automatic exchange of tax information, for leaving open potential loopholes concerning discretionary trusts and companies and for giving organised criminals an opportunity to money launder the proceeds of their criminal activities through Switzerland whilst continuing to conceal their identity from the UK authorities’, the Financial Times reported.