Customers confidentiality serves public interest best

The banking and building society industry believes a balance must be found between maintaining appropriate customer confidentiality and tracking down people who fail to pay their taxes.

In response to HM Revenue and Customs’ (HMRC) limited consultation on the provision of information about offshore account holders, the industry has raised concern over HMRC’s current proposals for banks and building societies to complete a questionnaire to determine if they must disclose details of offshore accounts held by UK residents.

The industry does not wish to shield those avoiding their legal obligations, but needs to protect its long standing reputation for care and concern for the customer.

Key points made in the response to the consultation are:

The industry has no interest in protecting tax evaders

We do want to work with HMRC on any future voluntary disclosure regimes

Banks and building societies have a legal duty to keep customers' affairs confidential (except under four exceptional circumstances set out in the Banking Code)

We do not believe that a questionnaire assures banks and building societies that HMRC has sufficient evidence to satisfy the necessary legal criteria

HMRC has underestimated the time needed for institutions to carry out the sort of reviews it is demanding

BBA Chief Executive Angela Knight said “Customer confidentiality and confidence are at the heart of the success of personal banking in the UK. The relationship between customer and banker is very precious and, while we support efforts by the government to ensure arrangements are in place so people pay the tax they owe this needs to be balanced by regard for the law and personal privacy.

“Banks comply with the law and have no desire to shield people who fail to pay their taxes. However, at a time when people naturally question the ability of the authorities to take proper care of personal data, we think it would be premature to provide more information on off-shore account holders to Revenue and Customs. We will continue to work closely with HMRC on how they can achieve their legitimate goal of ensuring the correct tax is paid while always seeking to maintain the traditional customer privacy which has served us well.”

Adrian Coles, Director-General of the Building Societies Association, said: “We are concerned that HMRC’s plans to ‘short-circuit’ the legal process could endanger customer confidentiality and the security of customer information.

”We have no wish to stop HMRC collecting unpaid tax but we do want due process to be clearly followed. Building societies and their banking colleagues are happy to work with HMRC to that end.”

John Treadwell, Managing Director of the Association of Foreign Banks, said: “When considering HMRC’s proposals, foreign banks must take into account both the requirements of the UK Government and the legal obligations of foreign jurisdictions concerning banking secrecy and data protection.

“Just as HMRC must work within the legal framework set down by UK law, so foreign banks must work within the legal frameworks of all the jurisdictions in which they operate. Foreign banks wish to behave responsibly and with due regard to all applicable laws.”