RSM Tenon has seen in the last few days a pattern across the country of HMRC raising serious enquiries under Fraud notices (COP9). From discussions on these cases the pattern may well be the link back to the Swiss data which was stolen in France and which may have been provided to UK Authorities under the Exchange Agreements.
The drive to tackle tax evasion is clearly underway and we have already seen in the last couple of years HMRC attacking offshore bank accounts. This is further evidence that HMRC is not afraid to make full use of its powers. With over 300 financial intermediaries already under notice to provide certain information on their clients to HMRC, we are expecting more notices to be issued over the next couple of months.
Background
Three years ago, an employee of HSBC bank acquired, without authorisation, the personal details of 24,000 customers who used its private banking facilities in Switzerland. HSBC was entirely unaware of the theft until after it was obvious that various authorities had seen and taken notice of the data.
The customers affected were not necessarily resident in Switzerland and a significant proportion, in excess of 25%, are believed to be resident in or have tax liabilities in the UK.
Subsequent to the theft becoming public knowledge, HM Revenue and Customs acquired the details relating to those who had links with the UK and may have tax to pay using its exchange of information powers with the French authorities. It is understood that approximately 6,600 pieces of information are being reviewed.
HMRC clearly has serious concerns about those named, and it is probable that these concerns are fuelled further by the success of the Liechtenstein Disclosure Facility (LDF) which came about in part due to stolen information about Liechtenstein account holders being sold to HMRC.
We have recently seen a quick succession of new tax investigations under “Code of Practice 9 – Civil Investigations into Cases of Suspected Serious Tax Fraud” as a result of HMRC’s review of the HSBC information. These investigations are the most serious, non-criminal tax investigations that HMRC undertakes, and it is certain that criminal proceedings will have been considered. They are led by the Revenue’s elite investigators, often in the Specialist Investigations Office, and most of the recent cases emanated from the Glasgow office.
Previously, HMRC launched a number of opportunities, sometimes (incorrectly) referred to as “tax amnesties”, designed to encourage those with tax to pay to come forward voluntarily in return for reduced penalties. Those who knowingly failed to take part in these facilities, which include the Offshore Disclosure Facility in 2007, the New Disclosure Facility of 2010, the Tax Health Plan, and more recently, the LDF, are unlikely to receive sympathetic treatment from HMRC and will certainly suffer significantly higher penalties.
The LDF offers huge benefits to those that take part, including a considerable reduction in the number of years that are examined, and a low penalty. If however there is a Code of Practice 9 investigation in progress, this avenue closes. The trick is to make a voluntary disclosure before HMRC starts an investigation.
Enquiries will not be limited to Code of Practice 9, and seemingly less serious investigations can have devastating consequences – there is, for example, no immunity from prosecution.
If there is the possibility of unpaid tax, and there is an offshore bank account in existence, advice should be sought from a tax investigations specialist.
What to do if you receive a fraud notice?
If you receive a Fraud Notice you will require professional advice. For more information contact Gary Ashford on 07748 152007 or email gary.ashford@rsmtenon.com