HMRC is in the process of posting Code of Practice 9 (COP9) Notices to hundreds of UK residents who hold, or may have held, offshore accounts with HSBC in Switzerland. A COP9 Notice is generally issued where HMRC suspect serious tax irregularities where tax, interest and penalties are expected to be between £75,000 and £500,000.
The COP9 Notice explain that information obtained by HMRC suggests that the recipient is suspected of serious tax fraud and invites them to attend a meeting to discuss their affairs.
The information was stolen by a former staff member at HSBC's Swiss division, passed on to the French authorities, who in turn handed the relevant details to HMRC. It is believed the information contains data belonging to 15,000 high net worth individuals.
Howard Weintrob, tax specialists at accountancy firm Jeffreys Henry commented “The letters to HSBC customers have been sent out in the week the Treasury announced a £900 million clampdown on tax evasion.”
“Those with undeclared offshore accounts or assets are playing Russian roulette if they do not come forward. If an investigation is opened, they could face fines of hundreds of thousands of pounds in unpaid tax, interest and penalties and if prosecuted a criminal sentence.”
HSBC fired the employee and the Swiss authorities are pursuing criminal action against him but cannot extradite him from France for legal reasons.
WHAT TO DO
If you have already received a COP9 Notice you will need to seek professional advice as soon as possible. Often, unpaid tax, penalty charges and interest, can be negotiated with careful handling and expert technical knowledge.
Unfortunately, the New Disclosure Opportunity closed in January 2010 which allowed offshore account holders to declare unpaid tax on favourable terms, moreover, if you are now being investigated, you may be disqualified from entering the Liechtenstein Disclosure Facility (LDF).
If you have not received a COP9 notice and would like to disclose offshore accounts or assets, you may be able to under the LDF on favourable terms.
The LDF is not limited to taxpayers with accounts or assets in Liechtenstein provided a Liechtenstein connection is established; therefore the LDF can be used as an umbrella for the disclosure of any tax liability connected with an overseas assets.
The information contained in this article is for general information only and intended for UK tax payers. Tax investigations and disclosures is a very complex area and require careful guidance, timing, technical knowledge and negotiation.