A Client has received a letter from HMRC regarding bank interest, it relates to a period when his previous accountants were acting for him.
I quote from the HMRC letter "We routinely compare information we receive from the financial institutions with our own records. This check has indicated that the figures we hold do no match...."
It would appear that they may be right and interest may have been understated, I have asked for a copy of the relevant years SA return from his last accountants.
However my question is, surely these details held by the "financial institutions" are confidential, shouldn't the financial institutions not need permission before sending confidential information to HMRC.
Thanks in advance
Dave
dave gooding
Replies (7)
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Bank reporting
Bank's don't have to simply report what tax has been deducted. They have to report interest paid free of tax also.
tax
They collect the tax for HMRC and so presumably have to supply HMRC with details of who they are collecting it for.
and a good reason...
...to be upfront, even where it's just pennies as the HMRC capture computers flag the discrepancy whether it's £1 or £1m.
If it's been taxed at source, it's only a minor inconvenience to your client to identify the amount. Anything that stops you racking up 'random' enquiry flags can't be bad.
Statutory Reference
Sections 17 & 18 TMA 1970 are the relevant statutory references for HMRC
Statutory powers
There are numerous bits of legislation which allow (with some safeguards) HMRC and law enforcement bodies to obtain information from banks and others and to pass information between various government / law enforcement bodies.
This legislation is not always where you might first look to find it. Section 19 Anti-terrorism, Crime and Security Act 2001 allows HMRC to pass to other agencies information which it holds for, amongst other things, "the purposes of any criminal investigation whatever which is being or may be carried out". So, for example, a local authority investigating suspected Housing Benefit fraud can obtain information from HMRC in relation to the subjects of their investigation.
... and they do
Banks and Building Societies automatically send details of interest paid to HMRC electronically. No hiding.
Confidentiality?
No Dave the records are not confidential. Banks and Building Societies, and indeed other financial institutions, are required to inform HMRC of interest credited to accounts.