It has been reported that HMRC have sent letters to 600 offshore account holders requesting information regarding their tax advisers in what has been labelled a ‘fishing expedition’ by the government department.
The move could signify a major step in HMRC’s campaign against tax avoidance regimes.
Banks or tax advisers who have helped their wealthy customers to move money offshore have recently come under massive scrutiny.
HMRC are looking to build up a picture as to how UK financial institutions have made hundreds of millions of pounds by promoting or advising tax avoidance schemes.
The letters have been sent to the randomly selected offshore account holders in the hope of asking a few questions about how accounts were opened, operated and maintained.
Reponses from the letters are thought to help to form a wider investigation by HMRC inspectors who are keen to crackdown and stop tax avoidance schemes that allow wealthy Britons to keep large amounts of money in offshore accounts.
Countries such as Liechtenstein and Jersey are popular choices as they have low-tax jurisdictions and so money can be held there with a minimal amount of tax to pay.
Tax advisory work has become one of the most profitable businesses in the UK, particularly over the past decade.
Barclays is one such bank that has profited enormously from tax advisory work and senior tax experts have also made small fortunes by counselling banks’ clients on the variety of ways to minimise their tax liabilities.
However, as far as HMRC are concerned, it is now time to stop this successful line of business.
Lawyers have warned recipients of these ‘fishing expeditions’ letters to be careful about the information they do disclose to HMRC.
The possibility of taxpayers to slip up and implicate themselves is just too easy.
Even an informal telephone call with HMRC could give way to off-the-cuff comments which will be noted down and could be used against them or their advisers in future investigations.
So the advice is this – any taxpayer who has received one of these letters needs to seek professional advice or really watch what they say.