HMRC sends ‘nudge’ letters to UK customers of Euro Pacific Bank

HMRC is sending ‘nudge’ letters to hundreds of UK customers of Euro Pacific Bank urging them to check and correct their tax affairs.

The UK tax body is writing to around 600 people in the UK who used the collapsed Puerto Rican bank that is linked to tax evasion and money laundering.

HMRC has already launched criminal investigations into UK customers of Euro Pacific Bank (EPB). But more probes could follow into those who decline to make necessary corrections to their tax affairs.

What happened with Euro Pacific Bank?

The Puerto Rico Office of the Commissioner of Financial Institutions (OCIF) suspended the operations of EPB on 30 June 2022 for breaching its capital requirements. The bank has since entered a liquidation process.

EPB was at the centre of a global day of action by the Joint Chiefs of Global Tax Enforcement (J5) in 2020. This was part of an investigation into suspected tax evasion and money laundering.

Hundreds of civil and criminal investigations involving EPB have already been launched across the J5 jurisdictions of the UK, Canada, Australia, the Netherlands and the United States.

What should you do if you get a ‘nudge’ letter?

If you receive a letter from HMRC about offshore assets (such as those relating to Euro Pacific Bank), you have the chance to come forward and make a full disclosure using the Worldwide Disclosure Facility (WDF).

Simon York, HMRC’s Director of Fraud Investigation and the UK’s J5 Chief, said: “We have tax enquiries, criminal investigations and intelligence operations already underway involving this bank and there will be more to come. Anyone with an account at this bank should come and speak to us before we come and speak to you.

“Tax evasion is increasingly global. Our J5 alliance has enabled us to work across borders to enhance our ability to tackle these sophisticated and complex threats to international tax systems.

“Our message is clear – the game is up for offshore tax evaders.”

Our thoughts on offshore tax issues

The world is becoming an increasingly smaller place and jurisdictions are now working together to avoid tax evasion.

If HMRC gives you the opportunity to correct your tax affairs, you should do so to prevent matters escalating – sometimes into prosecution.

It’s crucial you’re aware of the tax rules that apply to you and that you fully comply with your tax obligations to avoid potentially serious issues with HMRC.

If you fail to declare your overseas income and gains, you could face paying not only the tax due, but also the interest and sometimes penalties of up to 200%.