Tax Investigation Specialists

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HMRC target Swiss HSBC account holders

HSBC

HMRC announced in October 2011 that it would commence writing to UK residents and organisations holding Swiss bank accounts with HSBC in Geneva who it believes have not reported all their income and gains. HMRC confirmed that the review of the information secured from the disgruntled former employee of HSBC indicates that there is in the region of 6,000 accounts with a UK “footprint”. The UK resident account holders will be given the opportunity to disclose any tax irregularities. Those account holders who are not presently under enquiry will be afforded a window of opportunity to contact HMRC and regularise their tax affairs. This could also feature in the account holder being able to participate in the Liechtenstein Disclosure Facility (LDF) and secure the tangible benefits of a reduced period where HMRC can recover liabilities and a fixed preferential penalty of 10% maximum. The sting in the tail is that account holders who receive such a letter will only be given a maximum of 30 days to come forward and this deadline does not leave the account holders with much time to think about their options.

WLH is already acting for a number of individuals who have received such letters and would observe that in the first instance HMRC wrote to the registered Agent of the client advising that information was held concerning Swiss investments and advising the Agent that HMRC would initiate an investigation if the client does not come forward and make a full disclosure of all UK tax irregularities.

This announcement also confirms the recently signed deal between Switzerland and the UK was not a deadline for individuals to regularise their tax affairs. This arrangement will come into place in January 2013 and HMRC’s aggressive approach in relation to HSBC Geneva account holders makes it apparent to them that any thoughts that they had a year to resolve any tax issues are completely misguided and the net is already closing.

The letter issued by HMRC contains the warning that those account holders who do not come forward will be the subject of an investigation by HMRC. This could range from a criminal investigation or a civil investigation where penalties of up to 200% could be levied. The commencement of a civil enquiry under Code of Practice 9 - cases of suspected serious tax fraud - would exclude the account holder from participation in the LDF and the beneficial arrangements on offer.

These HMRC enquiries are being led by HMRC’s new Offshore Co-ordination Unit which has recently been established and is staffed by twenty five inspectors and numerous HMRC support staff. The Government made an announcement last summer that it would make available £917 million to HMRC to assist in closing the tax gap and targeting offshore tax evasion specifically. This Unit is a clear example of where HMRC is deploying the extra resource.

We believe that HMRC has clearly identified the HSBC Switzerland account information as a source of additional tax revenues and the formation of a specialist team to drive this initiative forward supports this. We expect that such letters will continue to drop on doormats and would urge anyone in receipt of such a letter to take immediate professional advice. It is evident that there is no escaping HMRC’s attention if you had an HSBC account in Switzerland. HMRC has also made very clear that it does not regard the 30 day response deadline as negotiable and failure to respond within this timeframe will result in the account holder being investigated. Those who do come forward and are willing to make a full disclosure will be able to consider the best and most tax efficient method of dealing with their tax issues, including making a managed disclosure under the beneficial terms of the LDF.

HMRC’s net is closing on the HSBC Geneva account holders and HMRC is telling this group that they can either come forward and disclose now or face either a criminal investigation or an intrusive and expensive enquiry with swingeing penalties.

We at WLH Tax have considerable experience of assisting individuals who have already been targeted by HMRC as part of the initial tranche of enquiries and ensuring that the most tax efficient route of regularising tax issues is identified and adopted. This initiative does not give the account holder the luxury of time in which to seek advice and decide on the best course of action, and it is essential that those who receive such a letter take swift and positive action.

WLH Tax has also negotiated with a leading Liechtenstein Bank that all new accounts opened in that jurisdiction and required for inclusion within the LDF process will not accrue any account opening charges. This provides a considerable saving as other Banks can charge in excess of €5,000 to attend to the account opening formalities.

It is therefore imperative that early advice is sought in all cases where an HMRC letter is received concerning HSBC Geneva accounts.

How can WLH Tax help?

Call us now

Please call WLH Tax on +44 (0) 207 491 9690 or +44 (0) 207 491 9696 for an initial confidential discussion if you have an offshore bank account and you have received a letter from HMRC. We will be able to assess your options with a view to mitigating your tax exposure.