Taxman Obtains List Of Jersey Bank Accounts

20.11.12

Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

Information on over 8,000 HSBC Jersey clients has been leaked to the tax authorities. Half of the names on the list are UK residents, while the rest are based in various other countr

Information on over 8,000 HSBC Jersey clients has been leaked to the tax authorities. Half of the names on the list are UK residents, while the rest are based in various other countries.

We had a similar situation with HSBC Geneva a few years ago. This enabled the tax authorities in the UK and elsewhere to trace tax evaders and recoup unpaid tax and interest and penalties. We would imagine there will be a similar outcome this time.

This latest incident was uncovered by the Daily Telegraph which published an expos?on 8th November.

According to the report, HM Revenue & Customs (HMRC) received information on 4,388 UK residents. This is, apparently, every Briton with an HSBC bank account in Jersey. The data includes clients? names, addresses and account balances. Between them they hold ?699 million in HSBC current accounts at the bank?s Jersey branches.

The list was provided by an anonymous source, described by the Telegraph as a ?whistleblower?. HMRC does not appear to have paid for the information.

In all, the list contains 8,474 names, including 527 in France, 333 in Spain and 117 in the US. Reports in Cyprus have since indicated that the list contains names of 134 Greek Cypriots, though this is not backed up by the Telegraph or official sources.

It is of course completely legal to use offshore bank accounts, provided you accurately report the income (and wealth where applicable) in your country of residence. Whether you live in the UK, France, Spain, Cyprus or Portugal, you are obliged to declare your worldwide income.

Offshore bank accounts can provide various advantages for British expatriates, but tax planning is not one of them. And you should only ever use tax planning which is compliant in your country of residence. If you are looking for tax efficient arrangements for your savings and investments, contact a firm like Blevins Franks for up-to-date advice on what works here in your country of residence, and also, importantly, what would work for your circumstances and objectives.

UK names

The Telegraph article emphasises the fact that the list of bank account owners includes known criminals. A convicted gun runner, drug dealers and three bankers facing fraud charges are said to be on the list.

It also reportedly includes bankers and senior figures in the city, one apparently holding ?6 million in his account. There are also doctors, mining and oil executives and oil workers.

The list also contains dozens of people who appear to have no source of substantial income and yet still hold large amounts in Jersey, which is exactly the sort of anomaly UK tax investigators look for.

The UK tax authorities are understood to be going through the list and comparing it to tax returns to determine which accounts have been correctly declared and which have not.

In a statement, HMRC confirmed:

?We have received the data and we are studying it. We receive information from a very wide range of sources which we use to ensure the tax rules are being respected.

?Clamping down on those who try to cheat the system through evading taxes and over claiming benefits is a top priority for us and we value the information we receive from the public and business community.?

The consequences of using Jersey (or other offshore centres) to evade tax in the UK include heavy penalties, possibility of criminal prosecution, possibility of naming and shaming.

Other countries

We can expect the names of clients based in other countries to be passed on to their tax authorities. This is what happened with the HSBC Geneva list and is typical of the exchange of information we see nowadays as governments work together to fight tax evasion.

HSBC

The bank has launched an urgent internal enquiry in the ?alleged loss? of client data, and has said it would cooperate with any investigation if required to do so.

This is an embarrassment for the bank, not only because of the breach of security. It raises questions about its internal compliance procedures in Jersey and how it vets customers. HSBC is already facing a large penalty for failing to implement proper controls in Mexico.

Jersey

Jersey insists that it is not a haven for drugs money, tax evasion or other crime.

This incident could however put more pressure on Jersey to commit to automatic exchange of information, especially if it is established that people have been using the island to evade tax.

Guernsey and the Isle of Man already automatically report on the accounts of EU residents under the EU Savings Tax Directive.

This list of Jersey clients, and presumed tax crackdown that will follow, comes amid a wider attack on tax evasion in the UK and elsewhere. Offshore banking has been under intense scrutiny since the financial crisis, and any evidence of tax evasion here will not help matters.

For advice on legitimate and effective tax planning arrangements available in Spain, France, Portugal, Cyprus and Malta, contact Blevins Franks which has decades of experience advising expatriates.

14th November 2012

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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