Tax office targets 6,000 HSBC Swiss accounts
LONDON (Reuters) - Britain is offering up to 6,000 holders of Swiss bank accounts at HSBC a last chance to come clean with the taxman or face possible investigation that could involve a criminal probe.
The HMRC has already started criminal and serious fraud investigations into more than 500 individuals and organisations, it said on Thursday, and will shortly start contacting the rest.
"They will be offered a window of opportunity to contact HMRC and disclose all their tax liabilities," the body said. A source at HMRC said the account holders will have 30 days from being contacted to come forward.
Those that do not will be investigated and could incur penalties of up to 200 percent of the tax liability, the source said.
HMRC said it was "acting on information received last year under a tax treaty."
The source said the information was obtained through an exchange agreement with French authorities.
However, the original source of the data is a haul of up to 24,000 Swiss client accounts stolen from HSBC by a former IT employee, the source said.
The details subsequently found their way into the hands of tax authorities around Europe, including the UK.
Switzerland's coveted banking secrecy has come under increasing pressure as tax authorities in the United States, neighbouring European countries and now Britain step up crackdowns on hiding funds abroad.
Offshore private banking in Switzerland has grown into a $2 trillion (1.27 trillion pounds) plus industry as it drew in wealthy clients from around the world looking for an economically and politically stable location that would protect their privacy when they deposited their money.
It came at a cost -- private banking in Switzerland is generally regarded as an expensive option -- but clients considered it a price worth paying, particularly if they could benefit from the tax advantages on offer.
"You can work on the basis that there's going to be a stonking huge amount of cash behind this. It's not worth your while using Switzerland unless there's a fairly massive amount there," said John Christensen, director at Tax Justice Network, which campaigns against tax havens.
HSBC's private banking arm expects customers to entrust it with at least $4 million to be eligible for an account.
The source at the HMRC said the probe was limited to the individuals, companies and trusts holding accounts and did not extend to an investigation of the bank itself.
An HSBC spokeswoman said: "HSBC does not condone tax evasion, and clients are responsible for their own tax affairs."
Earlier this year, the British government made 917 million pounds in new funds available to help fund the pursuit of tax evaders.
HMRC's Permanent Secretary for Tax Dave Hartnett said in a statement the latest move did not constitute a tax amnesty.
"There are no special rates of penalty or interest for those who come forward voluntarily. This is an opportunity for those who have made errors in the past to correct them," he said.
Simon Airey, partner at law firm DLA Piper, said it was an "extraordinarily generous offer."
"Those who know that they have unpaid tax liabilities would be mad not to take advantage of this offer, but they would need to move quickly," he said.
Dawn Register, a director in the tax investigations team at London accountancy firm BDO who has advised some of the HSBC clients under scrutiny, said HMRC may be offering a disclosure window because carrying out 6,000 tax investigations would be beyond its means.
"From HMRC's perspective it makes sense ... It saves them a lot of work and they get the tax take they are looking for," she said.
Register added a number of her clients with Swiss HSBC accounts have used an existing disclosure agreement designed to bring in money hidden in Liechtenstein to settle their affairs.
The Liechtenstein Disclosure Facility runs until the end of March 2015, offering reduced penalties for disclosure of undeclared offshore assets.
People with money in Switzerland can use the facility by transferring some of the money to Liechtenstein, unless they are one of the 500 already under investigation by HMRC.
In August, Switzerland and the UK struck a deal to tax money kept by British residents in Swiss accounts that could net around 5 billion pounds.
(Additional reporting by Martin de Sa'Pinto in Zurich and Steve Slater in London; Editing by Sinead Cruise, Will Waterman and Erica Billingham)
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