Barclays Bank Offshore

Published on 05 June 2006
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In a bid to crack down on UK tax evasion, a recent ruling by the Special Tax Commissioner John Avery gave HM Revenue and Customs (HMRC) full authority over Barclays Bank Offshore to force the bank to give HMRC access to confidential customer records where the customer in question has a UK based address and offshore accounts in jurisdictions such as the Channel Islands.

The ruling was enforced despite Barclays Bank quite rightly declaring that such action would be a gross infringement of their customer’s human rights.  The implication of the ruling is that because Barclays Bank Offshore has an onshore parent in the form of Barclays Bank PLC which holds certain customer information, all customer information can be accessed by UK based HMRC – so what exactly does this disturbing and slightly tenuous ruling mean for the confidentiality or otherwise of an offshore bank’s customer’s personal and transaction information, and more importantly why aren’t institutions like Barclays Bank Offshore more concerned by the ruling?

First things first HMRC launched the case against Barclays Bank Offshore because they are in the business of clamping down on tax evasion and they believe that many UK based citizens and businesses have undeclared wealth held offshore.  HMRC have estimated that the passing of this ruling against Barclays alone will enable them to recoup lost tax on around GBP 1.5 billion of undeclared offshore assets.  Naturally enough though the offshore financial industry sees the ruling as a precedent having been set meaning that it is likely HMRC will now go after all other offshore financial institutions which have UK based parent companies which store customer records onshore.  If this is true then the ruling is merely the tip of the iceberg in terms of how deep HMRC are planning to dig. 

The ruling by the Special Tax Commissioner allows HMRC to look at records dating back ten years which means that many past and present Barclays Offshore Bank customers could be about to receive ‘enabling’ letters from HM Revenue and Customs asking them to think back and to think long and hard and explain what assets they hold where, how they obtained them and where and when they paid tax on them – now this article is not a commentary on the illegal practice of tax evasion nor the HMRC’s constant battle against it – rather it has been written in a bid to warn those unsuspecting, perfectly legitimate offshore bank account holders that they could be about to lose the one critical aspect of their offshore bank account that they thought was rightfully theirs – namely their right to absolute privacy.

It is so often preached that investing and banking offshore is a right that we all have and that it can enable us to secure our assets’ protection, protect out personal privacy and account transaction confidentiality for example – well not any more it seems. 

But instead of being horrified by a ruling that is so simply anti those who choose for one reason or another to hold an offshore bank account, many offshore financial industry insiders are just shrugging their shoulders as though they couldn’t care less about their customers. 

Why are they doing this? 

Is it because this ruling only affects the average person who has limited funds in an offshore current account because they have a property abroad for example or because they sometimes work overseas and need more account flexibility?  Is it because this ruling only affects people whose account deposits are not really all that significant to major banking institutions who actually much prefer to look after their private and corporate customers maybe?  Could it be that banks don’t actually care about their customers?  Is that why banks are not rushing to tell their customers about the potential fallout this ruling could create? 

Who are we to say, we’ll let you figure it out for yourself…but the final word goes to Jersey based lawyer Paul Sugden who succinctly summed up the consensus of opinion in the banking industry “I don’t believe that this line of enquiry will have a material impact on Jersey’s offshore business” – in other words it won’t damage the banks’ main business so why should they care?

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