HMRC entitled to use stolen Liechtenstein account details
From The Times Online February 25, 2008:
British taxpayers with a bank account in Liechtenstein whose details were sold to HMRC will not be protected from investigation because the data in question was stolen, lawyers said.
HMRC confirmed that it paid for a list of British account holders stolen by a former employee from a bank in the tax haven. Reports said the Revenue had paid £100,000 for the list, which is believed to contain around 100 names and could yield as much as £100 million in unpaid taxes.
Lawyers said that HMRC was entitled to use the information regardless of how it obtained it. The taxman regularly pays whistleblowers for tip-offs that lead to the collection of tax, they said, and the fact that the information may have been obtained unlawfully is not a consideration.
The Taxes Management Act, 1970, originally stated that a court hearing a tax evasion case could consider evidence obtained “by any lawful means”. However, in 2004, the word “lawful” was dropped from the legislation.
According to Roger Bindschedler, a tax partner at Howard Kennedy, this means that potentially stolen data would be admissible although he added that the Revenue would be unlikely to rely on “stolen” data as its sole source – and would probably combine it with other evidence gained through more conventional means.
In addition, the Data Protection Act 1998 contains exemptions for information obtained in the course of preventing crime or collecting taxes. Sarah Needham, a solicitor at Macfarlanes, said: “As far as data protection issues go, the Revenue would be able to use this information.”
Lawyers said that account holders could seek a court injunction preventing HMRC from using the data but it would be unlikely to succeed. The courts would be reluctant to appear to put privacy ahead of the interests of justice, particularly if the data suggested the account holders had been evading tax.
Experts predicted that British tax authorities, encouraged by a series of raids in Germany using similar information, would seek to use the data unless a court ordered it not to.
There is a possibility of criminal prosecutions for tax evasion, which can carry a custodial sentence.
HMRC declined to comment on the exact source of the data but said it ensures information is “well-based before making any payment”.
In a statement, it said: “Most people under investigation have substantial amounts to pay with at least £100 million tax at risk in the UK. HMRC is determined to protect the UK’s tax base from evasion and in doing so we will use all the statutory powers we have. It should now be clear to everyone that that there is no safe hiding place for the proceeds of tax evasion. Those who have hidden income and gains should make a prompt and complete disclosure to HMRC.”
