At the end of 2006 the Special Commissioners decision in HMRC v Financial Institution was published. The ruling involved a UK high street bank (understood to be Barclays) which was required to provide details to HM Revenue & Customs of offshore bank accounts held by its UK customers under the provisions of Section 20 (8A) Taxes Management Act 1970.
Four further Special Commissioners' decisions have since been released ruling that four additional financial institutions are required to provide similar details for their customers.
HMRC are preparing to issue letters to relevant individuals where underpayments of tax are suspected, offering to settle back tax liabilities with minimal penalties if a full disclosure is forthcoming. The launch date was 17 April 2007. In addition, Barclays (and possible others) are issuing letters to their customers in respect of whom information has been supplied to HM Revenue & Customs.
Clients have a one off opportunity to disclose liabilities from offshore accounts if they wish to minimise penalties arising. There is a requirement to disclose in principal by 22 June 2007, and liabilities have to be calculated and paid by November 2007, although in practice it may be possible to negotiate alternative arrangements.
There is to be a fixed penalty of 10%. Clients should be made aware that failure to make a full disclosure could result in increased penalties or even criminal prosecution. The disclosure covers all taxes and liabilities arising up to 5 April 2006 and considerable care will be needed in the way in which such disclosures are made.
Any cases discovered after this initial offer period will have penalties of up to 100% charged. All practitioners need to have an understanding of what the issues are if a disclosure is to be made to ensure that such disclosure is made correctly and presented in their clients best interests.
