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Tax Investigations eFlash | July 2008
The net tightens on offshore and Swiss deposits
There have been a number of recent developments in relation to offshore investments and Swiss Banks in the USA. This comes at a time when the UK authorities are also looking to approach more financial institutions for information on offshore assets. Read on to see how these developments may affect your clients:
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Action against Swiss banks in the USA: The US Internal Revenue Service is seeking a 'John Doe' order for details of an unnamed class of account holders in the USA from the Swiss bank UBS.
Actions: If your clients have undeclared accounts with Swiss banks, be aware that this information may become available to tax authorities around the world.
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HMRC access to FBI systems: Her Majesty's Revenue & Customs (HMRC) is reportedly considering sharing details of UK taxpayers with the US authorities in exchange for access to the latest FBI data interrogation tools.
Actions: If your clients have investments offshore they should consider making any necessary disclosures on a voluntary basis rather than waiting for HMRC to access this data.
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HMRC use of ODF facility data: Taxpayers who did not come forward under the 2007 Offshore Disclosure Facility (ODF) which related to the five major UK high street banks, are receiving letters and phone enquires where disclosures have not been made and liabilities are identified.
Actions: Taxpayers who cannot sustain a non-domiciled argument, or account legitimately for offshore deposits, will face investigation and penalties considerably higher than the 10% offered by the ODF. However, penalties can be substantially reduced by carefully managed voluntary disclosure of any issues.
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HMRC widens the net - further action against offshore accounts: It is understood that HMRC has already approached a further 150 institutions, but has yet to start formal proceedings to obtain details of their offshore client accounts.
Actions: If your clients did not come forward voluntarily under the ODF, perhaps because their investments were not with the banks targeted, then now might be a good time to make sure that all offshore investments are disclosed to you before the next tax return is prepared on what may be an incorrect basis.
If you would like to discuss any issues or would like more details on how these developments may affect your clients, please speak to your usual Grant Thornton contact or any of the following:
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