HMRC continues hunt for offshore tax evasion

12 July 2022

At the beginning of July 2022, HMRC announced that an international investigation had led to the deregulation of the Euro Pacific Bank in Puerto Rico. Euro Pacific Bank is accused of facilitating tax evasion and of money laundering on a global scale.

HMRC has explicitly said that it believes there are hundreds of UK taxpayers that have not only used the services of Euro Pacific Bank but have done so to evade paying UK taxes.

It is not yet clear what specific information HMRC has gathered, but it is clear that it has identified a population of UK taxpayers that hold accounts with Euro Pacific Bank and envisages opening investigations in the near future, some on a criminal basis.

HMRC has already launched some criminal investigations into the suspected evasion, and it has encouraged individuals who have engaged with Euro Pacific Bank to come forward before becoming the subject of an HMRC investigation.

Whilst this is of immediate concern to Euro Pacific Bank account holders, it is evident that the issues highlighted in this case point to a much wider issue and could well lead to an extensive raft of action by HMRC in respect of offshore accounts.

It is unclear where HMRC will go next in terms of uncovering further institutions like Euro Pacific Bank, but with the success of this investigation it would be reasonable to believe that this is only the start.

It is not uncommon to see HMRC focus on tackling the tax evasion committed by the end users of these offshore financial institutions, so it is good to see it also taking proactive action against the institutions themselves. HMRC is showing that the facilitation of tax evasion is in its sights, and the action against Euro Pacific Bank could well be the prelude to criminal prosecutions being taken against other corporate institutions.

HMRC continues to maintain a high profile of continued aggressive action against tax evasion and its facilitation. The public seems to welcome this action, and it is unlikely HMRC has finished its hunt for further potential illicit activity.

The Worldwide Disclosure Facility provides taxpayers with the opportunity to proactively declare historical discrepancies in relation to offshore matters to HMRC. By making an unprompted disclosure, taxpayers can expect to receive more favourable treatment from HMRC than those who are forced to comply with an investigation.

For anyone worried about criminal prosecution, in the right circumstances the Contractual Disclosure Facility provides an opportunity to secure immunity from prosecution in exchange for cooperation and full disclosure.