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Banks forced to reveal offshore client details

13 August 2009
Issue: 4219 / Categories: News , NDO , ODF
NDO orders issued to 300-plus institutions - but do HMRC have resources to process data?

More than 300 banks have been ordered to hand over details to HMRC about customers with offshore accounts – in a move that has had its effectiveness questioned by a leading tax investigator.

The issuing of the notices by the Tax Chamber of the First-tier Tribunal is the latest step in the Revenue’s long-awaited New Disclosure Opportunity (NDO), the follow-up to 2007’s Offshore Disclosure Facility (ODF).

The NDO – which will begin on 1 September and run until 12 March 2010 – aims to encourage individuals to come forward with details of undeclared income from overseas investments. In exchange for their candour, they will incur relatively mild fines: either 10% or 20% of the taxes evaded, depending on circumstances.

The financial secretary to the Treasury, Stephen Timms, said that the 'ruling represents real progress in creating a level playing field for all taxpayers’, while Dave Hartnett, HMRC’s permanent secretary for tax: declared: ‘We will use the information provided… to pursue people who continue to flout the UK’s tax laws’.

The data gleaned from financial institutions, however, may not be put to the best use, according to Tony Dickinson, a partner at the award-winning investigations firm Gilbert Tax.

‘Will all the orders be issued successfully? Yes,’ he said. ‘Will the Revenue get through all the information with the staff it has – and on time? I think it’ll be a struggle.’

Mr Dickinson, a former tax inspector, highlighted a further concern: that HMRC have not made maximum use of the information they gathered during the ODF, the so-called ‘tax amnesty’.

‘If I were running an institution and received an order, I might object on the grounds that my colleagues and I will have to spend a lot of time and effort gathering the required information without any assurances that the Revenue will make good use of it,’ he said.

The data from the banks will have to be matched and compared with each individual’s documentation already held by HMRC, and only then can action be taken, remarked Mr Gilbert.

‘It’s a long process, and I don’t believe the Revenue has the resources to handle it.’

Issue: 4219 / Categories: News , NDO , ODF
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