Banks forced to disclose offshore account details

Every bank with a UK presence has been ordered to surrender details of customers holding offshore accounts to HMRC.

HMRC can issue the information notices to banks ahead of the New Disclosure Opportunity (NDO) designed to allow Brits with unpaid taxes linked to offshore accounts to settle their liabilities at a penalty rate.

The revenue will use the information to ensure individuals pay the right tax and to check NDO disclosures are complete.

Under NDO rules, individuals who make an accurate and complete disclosure will qualify for a 10% penalty. However, those who pass off the opportunity and are found to owe tax are likely to face a penalty of 30% or more and risk facing prosecution.

The Tax Chamber of the First-tier Tribunal has ordered 308 banks to hand over the information after HMRC got ‘production orders' against them.

Targeted banks are believed to be UK institutions with offshore branches plus foreign banks with UK customers.

The move is similar to the five writs obtained to probe offshore accounts of customers of Barclays, HBOS, HSBC, Lloyds TSB and the Royal Bank of Scotland in 2007, linked to the previous amnesty, the Offshore Disclosure Facility (ODF).

The message from HMRC this time round under the NDO is: "It doesn't matter who comes forward, HMRC will collect data and catch up with you," says John Cassidy, tax investigations partner at PKF Accountants.

He believes the first round amnesty or ODF was more of a stepping stone as politicians felt they could not go after obscure banks abroad before chasing UK high street banks such as Lloyds and HSBC.

Cassidy adds: "Their approach hasn't got any more aggressive, it has just evolved."

He believes part of their plan is to put people off holding money and assets offshore and in the short-term it will work.

"But as countries including Liechtenstein and Switzerland become less opaque in their banking practices, tax authorities won't mind people using offshore centres as they will be able to see into them in the same way as they can monitor UK accounts.

"Eventually there will be so much transparency it shouldn't matter where you bank."