HMRC issues warning to UK taxpayers of Euro Pacific Bank

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Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member

Don't know how I missed this conf/(%. But good luck to Euro Pacific customers who live in UK or used UK companies.

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On 30 June 2022, it was announced that the Office of the Commissioner of Financial Institutions (OCIF) of Puerto Rico issued a cease-and-desist order against Euro Pacific Bank, following the result of a two year investigation. The Puerto Rican Financial Sector Regulator announced the de-registration of Euro Pacific Bank, taking prompt action in order to prevent the Bank from carrying out any other business.

This announcement comes as a result of a two year investigation undertaken by the J5 (the Joint Chiefs of Global Tax Enforcement, an international group of tax authorities), which investigated into activities which allowed the Bank to serve as a vehicle of suspected tax evasion and money laundering on a global scale.

As a result of the J5's success, HMRC's Chief Investigation Officer and Director has also issued a statement, claiming that HMRC believes hundreds of individuals in the UK have used the products and services of Euro Pacific Bank. On that basis, HMRC are launching a series of tax enquiries, full criminal investigations and intelligence operations in order to stamp out suspected tax evasion.

This is an unprecedented statement from HMRC, evidently a consequence of the time and effort that has been invested into the latest investigation. HMRC states at the end of its announcement that taxpayers ought to "come to us before we come to you", indicating that they will not hesitate to use its powers to launch a full criminal investigation or open an enquiry.

This is yet another timely reminder and warning to taxpayers who may be impacted by the Euro Pacific Bank probe – although HMRC's invitation to come forward as quickly as possible seems cordial, careful consideration must be taken when considering making voluntary disclosures. It is crucial to fully understand the nature of a tax query and the risks involved, as well as what proactive actions should be taken in order to mitigate such risks.

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4 Aug 2022

HMRC have confirmed that they are investigating UK taxpayers with connections to Euro Pacific International Bank in Puerto Rico for suspected tax evasion and money laundering. They are urging those with connections to the bank to check their tax position and to contact them if they need to correct their tax affairs. More information about HMRC’s activity, including a letter campaign starting on 8 August 2022, can be found in the attached note that the CIOT has prepared for members. A copy of the letter and a copy of the associated nominated agent notification letter are also provided.

Nudge letter
Agent letter

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wellington

Entrepreneur
HMRC have confirmed that they are investigating UK taxpayers with connections to Euro Pacific International Bank in Puerto Rico for suspected tax evasion and money laundering. They are urging those with connections to the bank to check their tax position and to contact them if they need to correct their tax affairs. More information about HMRC’s activity, including a letter campaign starting on 8 August 2022, can be found in the attached note that the CIOT has prepared for members. A copy of the letter and a copy of the associated nominated agent notification letter are also provided.

Nudge letter
Agent letter

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Very British approach - Contact to Correct Tax Affairs.

US IRS instead have a mandate to collar or shoot to kill lol.
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
Very British approach - Contact to Correct Tax Affairs.

Your spot on. It is so polite of HMRC to the point its practically unnerving smi(&%.

HMRC would already have checked their last tax filing to see if all income via EPB is declared. So them asking a rhetorical question should scare some people to death.
 

NicolasMaduro

Entrepreneur
Isn't it a bit odd they are asking so politely? If you reach out and correct your tax affairs years back, have you not already committed tax fraud and might already be eligible for some prison time or fines?
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
By being polite they are hoping people will simply reply back and say they never had an account...lol. Remember in UK evading over £25,000 in taxes is considered a serious criminal tax offense rather than a simple one aka Tax Fraud.

------ quote from HMRC Internal guidance.

Guidance for taxpayers and advisors was published on GOV.UK on 16 March 2018.

What are offshore income, assets or activites?

Offshore income, assets or activities means:

  • income arising from a source in a territory outside the UK
  • assets situated or held in a territory outside the UK
  • activities carried on wholly or mainly in a territory outside the UK
  • anything with the effect as if it were those income, assets or activities
Situations where simple criminal offences have been committed

If the tax at stake in a case:

  • exceeds £25,000 and
  • arises from offshore income, assets or activities anywhere outside the UK
  • is not reportable to HMRC under automatic exchange of information (Common Reporting Standard (CRS), or similar EU directive, or UK bilateral tax treaty)
  • relates to a failure to notify chargeability or
  • relates to a failure to deliver a return or
  • relates to the provision of an inaccurate return
caseworkers should make a Suspected Fraud Referral at the earliest opportunity.

Where there is information “reportable to HMRC” from an automatic exchange of information agreement, the simple criminal offences will not apply. This is regardless of whether or not the information has in fact been reported to HMRC under CRS or equivalent automatic exchange of information.

The excluded “specified territories” are listed in the Schedule of Statutory Instrument 988/2017. The most up to date resource of active CRS jurisdictions is in the OECD list. A simple criminal offence may not have been committed if the tax was lost in a CRS jurisdiction, including EU member states. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Important:

The simple criminal offences do apply to lost tax arising from income, assets and activities in the United States (US) and its territories because the US has not joined CRS.

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You don't ever want to be done in UK for tax fraud.

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Collecting what is owed​

Whatever approach we take, we always seek to recover the money owed.

Where possible, that’s through issuing tax assessments or reaching agreements with taxpayers for the full amount of tax owed, applying penalties and interest as appropriate. These are often sufficient to recover monies owed. When we need to go further, we have access to a raft of other powers that allow us to disrupt and recover the proceeds of tax fraud.

That includes those under the Proceeds of Crime Act, which enable us to identify, confiscate and sell the assets of those convicted of tax fraud; failure to comply with these confiscation orders can lead to more jail time for the perpetrators.

Account Freezing Orders, meanwhile, allow us to quickly and effectively freeze and forfeit money in suspect bank accounts, stopping fraudsters from transferring funds out of our reach. We also continue to seize physical amounts of cash as part of our work.

And where we need to tackle companies involved in tax fraud, we can, and do, work with financial institutions and liquidators to wind them up, identifying and seizing their assets in the process.

These are unrivalled asset recovery powers that send a message that tax fraud does not pay.

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Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member


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Disclosures and penalties

If a taxpayer finds a mistake in their filings to HMRC, disclosing the error or omission before HMRC send a letter or open an enquiry will lead to the most favourable outcome. Following receipt of a nudge letter, a disclosure to HMRC will be treated as ‘prompted’ for penalty purposes. Prompted penalty rates are higher than those that apply to unprompted penalties. For example, the maximum prompted penalty for an offshore omission is 200%. In addition, a further penalty of 50% of the tax could be levied for an ‘asset move’. This is where assets are considered to have been moved from the UK or other jurisdictions, to avoid UK tax or to disguise non-compliance with UK tax legislation, and HMRC are very likely to consider using this power in cases involving EPB.

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