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Banks risk breaching confidentiality laws through HMRC offshore crackdown

A leading law firm is warning banks may risk breaching confidentiality laws in offshore jurisdictions if the HMRC forces them to supply customer information as part of its investigation into offshore tax evasion.

HMRC has the power to apply to the Special Commissioners of the tax tribunal for permission to serve a notice on banks requiring them to supply documents relating to taxpayers, where it believes those taxpayers have failed, or may fail, to pay tax.

CMS Cameron McKenna’s website Law-Now warns HMRC’s investigations may include the accounts of deceased customers, dormant and closed accounts.

In addition, HMRC has recently issued a consultation paper proposing increased power to order banks to freeze the sum of money it says is owing in the accounts of taxpayers, without needing a court order.

If the proposal is passed the bank would then be required to hand over the amount to HMRC after a certain time, assuming other attempts to collect the debt are unsuccessful.

CMS Cameron McKenna banking litigation solicitor Emily Springford says onshore banks risk breaching confidentiality laws in offshore jurisdictions if they disclose customer information.

She says: “Places like Switzerland have extremely strict rules about disclosing information. It’s a criminal offence to breach confidentiality laws there, so it can be very serious.

“We recommend banks that receive a request for information from HMRC take legal advice in the offshore jurisdiction, as well as in the UK.”



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