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HMRC issues warning to UK taxpayers of Euro Pacific Bank

Martin Everson

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Jan 2, 2018
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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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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.
 
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.
 
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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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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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HMRC and the downfall of Euro Pacific Bank – What this means for its UK based customers​



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HMRC has already confirmed that a number of criminal investigations are also underway, and HMRC have the powers to obtain and execute search warrants, search premises, make arrests and interview people under caution with a view to criminal prosecutions.

Dependent on the amount of the under declared tax, those successfully prosecuted will most likely face lengthy custodial sentences and confiscation of assets by way of post-conviction proceedings under the Proceeds of Crime Act 2002.

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Currently have HMRC investigating my involvement with EPB. I had an account there between 2015 and 2018 after I went off to America to get married. HMRC are not trying to prosecute me (currently) they just say I have undeclared foreign income and want to know my involvement with the bank. I'm worried an incorrect answer could lead to prosecution. I did have reasons for holding an account outside the UK. I moved to the US in 2017 and married my now ex wife. I'm not sure if my brief status as a US resident matters and I cannot remember what transactions were made as it's 4 1/2 years ago now since I last used the account. I should add I'm no longer in the US, I was only married briefly (12 months) and returned to the UK at the end of 2018

HMRC say they have evidence of a number of large deposits and withdrawals and accounts linked to a debit card.

Does anyone know what HMRC actually have and how can the information they hold be verified as legitimate? I genuinely do not have any records of these old accounts and I do not want to reply to HMRC with inaccurate information as they will take this as being uncooperative.

@Martin Everson you seem extremely well informed is it possible to send you a DM to ask questions?

Appreciate help/advice from anyone willing to give.
 
Currently have HMRC investigating my involvement with EPB. I had an account there between 2015 and 2018 after I went off to America to get married. HMRC are not trying to prosecute me (currently) they just say I have undeclared foreign income and want to know my involvement with the bank. I'm worried an incorrect answer could lead to prosecution. I did have reasons for holding an account outside the UK. I moved to the US in 2017 and married my now ex wife. I'm not sure if my brief status as a US resident matters and I cannot remember what transactions were made as it's 4 1/2 years ago now since I last used the account. I should add I'm no longer in the US, I was only married briefly (12 months) and returned to the UK at the end of 2018

HMRC say they have evidence of a number of large deposits and withdrawals and accounts linked to a debit card.

Does anyone know what HMRC actually have and how can the information they hold be verified as legitimate? I genuinely do not have any records of these old accounts and I do not want to reply to HMRC with inaccurate information as they will take this as being uncooperative.

@Martin Everson you seem extremely well informed is it possible to send you a DM to ask questions?

Appreciate help/advice from anyone willing to give.
Surely if you moved to the US then that period would be under US IRS tax.

- Trust you declared and paid that.
 
You need to speak to a lawyer asap.

You may have tax issues in both US and UK now as you were a tax resident of both countries while the account existed. This makes it very complex and expensive now. If you explained to HMRC what you just told me then they would speak to IRS also and now your a Lucky Pierre :confused:.

A lot depends on how much we are talking about here? More than £25k in taxes evaded is considered a serious tax offense in UK by HMRC and carries a jail sentence of up to 51 weeks. The US side I have no idea. Legal fees cross-border from UK to defend yourself would be crippling.


P.S You can DM me but I don't think my view will change unless there is more information that could change the facts.
 
Thank you for the quick replies Martin and Wellington. I have already engaged with a tax lawyer and am meeting with them this week for advice. Ultimately, I'd just like to pay HMRC whatever they feel I owe plus whatever fine they put on top. Avoiding a conviction is priority number one. I'm unsure of what tax would be owed but something between £20-30k total is my guess. I wish I still had the old statements and I'd be able to say with some certainty. I'm wondering if I ask HMRC for the "evidence" and I can tell them what is what and work out a number but maybe that is being overly optimistic.
 
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Glad you engaged a lawyer as they will work it all out for you. Best to get your own statements first from EPB but follow whatever your lawyers tell you.
 
The bank is in process of liquidation. Best to speak to lawyer first now I think about it. EPB may charge for the statements and there is no way of paying them I guess.
 
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In parallel to getting a lawyer involved, I would email EPB and ask if it is possible to get a copy of the old statements and what the charges would be.
To ask them about the charges should be free of charge. ;)

and there is no way of paying them I guess.
In the past it was possible to pay any fees by Mastercard and VISA.
Maybe it is still possible to pay by card.
 
Thank you for the quick replies Martin and Wellington. I have already engaged with a tax lawyer and am meeting with them this week for advice. Ultimately, I'd just like to pay HMRC whatever they feel I owe plus whatever fine they put on top. Avoiding a conviction is priority number one. I'm unsure of what tax would be owed but something between £20-30k total is my guess. I wish I still had the old statements and I'd be able to say with some certainty. I'm wondering if I ask HMRC for the "evidence" and I can tell them what is what and work out a number but maybe that is being overly optimistic.
Great to hear, just to clarify, you were aware there was tax?

If so sincerely, good luck.

You need to speak to a lawyer asap.

You may have tax issues in both US and UK now as you were a tax resident of both countries while the account existed. This makes it very complex and expensive now. If you explained to HMRC what you just told me then they would speak to IRS also and now your a Lucky Pierre :confused:.

A lot depends on how much we are talking about here? More than £25k in taxes evaded is considered a serious tax offense in UK by HMRC and carries a jail sentence of up to 51 weeks. The US side I have no idea. Legal fees cross-border from UK to defend yourself would be crippling.


P.S You can DM me but I don't think my view will change unless there is more information that could change the facts.
US Side is probably more severe, UK side is sure prison potential, but more so societal judgement...

US side is possible prison [with huge fines] and the prisons there are for profit - full of drugs, crime, murder, rape, and more.
 
Great to hear, just to clarify, you were aware there was tax?

If so sincerely, good luck.


US Side is probably more severe, UK side is sure prison potential, but more so societal judgement...

US side is possible prison [with huge fines] and the prisons there are for profit - full of drugs, crime, murder, rape, and more.
Well it's not that simple. There is how I see it and how HMRC will interpret it. If I had the statements I could make a better argument than without. And as for the scaremongering, doesn't work but have a great day.
 
How would a lawyer help in the case you can't get any statements? I'm sure the HMRC couldn't care less?!
 
How would a lawyer help in the case you can't get any statements? I'm sure the HMRC couldn't care less?!
My guess is a lawyer will help negotiate a settlement with HMRC. Which will likely be HMRC's interpretation of what's owed plus a large fine on top. HMRC maintain their primary policy is to recover unpaid taxes. So they may agree not to prosecute for full compliance with their procedures and payment of monies owed (plus fines).

I've tried asking Mr Schiff what info HMRC got from EPB. I guess his involvement was limited or maybe he gave info over to authorities to save himself. No one will ever know.

This is from HMRC:

"I have evidence to suggest you hold at least one account with Euro Pacific International Bank (EPIB). I have reason to believe that large sums of money have passed through your account(s) with this bank, dating back to at least 06 March 2015. My evidence suggests that you have made use of a prepaid card linked to an EPIB account, as well as directly depositing and withdrawing funds from at least one EPIB account.

It does not appear as though you have declared any of this income on your Self Assessment returns across the tax years ending 5 April 2015 – 2022.

I also have reason to suspect that, due to the way this bank operates, at least some of the funds passing through your EPIB account(s) have originated from a foreign country.

I need you to tell me about your involvement with EPIB."


They've either got all the info and are giving me a chance to disclose or they are fishing.
 
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