Euro Pacific Bank suspended trading on 30 June 2022 following an investigation into suspected tax evasion and money laundering. Although the bank was previously based in St Vincent and the Grenadines and, latterly, Puerto Rico, HMRC was involved in the investigation.
HMRC has now announced it will be investigating UK taxpayers with connections to the bank. What happened with the investigation, and how can the bank’s clients move forward?
Investigation into Euro Pacific Bank
In 2020, the Joint Chiefs of Global Tax Enforcement (which includes HMRC) carried out a global investigation (known as “Operation Atlantis”) following suspicion that the bank was facilitating client tax evasion and money laundering. The investigation revealed that several of the bank’s clients used sophisticated structures and international financial institutions to obfuscate their tax position.
As a result of the investigation, the bank was deregistered by the Puerto Rican authorities in June 2022.
HMRC investigating UK customers of Euro Pacific Bank
HMRC believes several UK tax residents have used the bank’s services and is identifying the bank’s clients with a view to determining whether UK tax has been evaded. HMRC has described its role in the investigation as a “landmark moment in HMRC’s response to offshore tax evasion”.
Nudge letter or criminal investigation
HMRC is currently encouraging clients of the bank to come forward and disclose any tax irregularities. It will be sending “nudge” letters to most of the UK tax resident clients identified.
Crucially, HMRC has stressed it is investigating account holders likely to be responsible for egregious tax fraud with a view to a criminal investigation. This may be due to the amounts involved, the length of time of the tax evasion, or because a taxpayer is high profile.
Possible “dawn raids”
Individuals subject to a potential criminal prosecution will not be sent “nudge” letters and may instead find themselves (and any related implicated parties) subject to a “dawn raid”. This is where HMRC (sometimes accompanied by the police) searches the homes and business premises of those suspected of tax fraud. The searches are carried out under warrants obtained beforehand and are invariably commenced early in the morning, hence the “dawn raid” moniker.
What should I do if I have been affected by Euro Pacific Bank?
There are various routes available to those with potential tax issues emanating from the activities of the Euro Pacific Bank, including criminal investigations. However, it is important to act quickly and take professional advice.
How we can help
If you have any questions about how the deregulation of Euro Pacific Bank or would like guidance get in touch with our tax investigations team.