The UK’s HMRC has confirmed that it is investigating hundreds of UK taxpayers who are suspected of using the Euro Pacific International Bank to evade UK taxes, as part of its “No Safe Havens” strategy. The bank’s operations have already been suspended by the Puerto Rican authorities for non-compliance with Puerto Rican regulations.
HMRC is part of the Joint Chiefs of Global Tax Enforcement, known as the J5, which comprises leaders of tax enforcement authorities from Australia, Canada, the UK, the U.S. and the Netherlands. The J5 is involved in this investigation with the Puerto Rican authorities, which follows on from another launched two years ago against suspected tax evasion and money laundering.
The bank, which was formed in St. Vincent and the Grenadines in 2011 before moving to Puerto Rico, provides accounts for individuals and small and medium-sized enterprises (SMEs) amongst others, including mutual funds and precious metal accounts.
HMRC normally receives details of UK taxpayers’ overseas bank accounts through the Common Reporting Standard (CRS), which requires participating countries to report personal data annually to the account holders’ home jurisdictions. Puerto Rico is one of the few jurisdictions that did not adopt the CRS, so this investigation should provide HMRC with new information on accounts held at Euro Pacific International Bank by UK-resident individuals.
HMRC is checking whether account holders have correctly disclosed Puerto Rican accounts and associated investments on past tax returns. If they have not, HMRC will open civil investigations or launch criminal investigations with a view to prosecution; we understand some criminal investigations have already started.
To help speed up the investigation process, HMRC is urging taxpayers connected to the bank to contact HMRC to disclose any undeclared UK taxes. Disclosures may be made via HMRC’s Worldwide Disclosure Facility (WDF) or its Contractual Disclosure Facility, also known as Code of Practice 9 (COP9). It is essential to carefully consider which disclosure method is appropriate based on each taxpayer’s specific circumstances before approaching HMRC. For example, COP9 provides protection from prosecution for tax offences, in exchange for a full disclosure of all UK tax irregularities, so it can be beneficial in many cases.
UK residents who hold or held accounts or investments with the bank should seek urgent, bespoke advice from experienced tax dispute resolution specialists who can support them through the disclosure process until a settlement covering tax, interest and penalties is reached. Those taxpayers who are directly approached by HMRC first will also need specialists to guide them through the tax investigation they face.
If you require any further assistance, please do reach out to your usual BDO contact.
Piyush Patel
piyush.patel@bdo.co.uk