How to do a compliance check: establishing the facts: asking for information: UK / Swiss tax cooperation agreement: completing the form sections 3 and 4
You need to complete this part of the form to demonstrate that HMRC has plausible grounds for making the request.
You should not be making the request if your suspicions of a loss of tax are purely speculative or form part of a ‘fishing expedition’. In order to comply with the terms of the Swiss agreement and to make sure that the Exchange of Information (EOI) provision is operating correctly, HMRC must be satisfied that
- every request has been independently risk assessed
- there is a definite and real risk of tax loss to the UK Exchequer
- there is a likelihood that undisclosed bank accounts or other structures have been used as a mechanism for hiding undeclared income or gains from HMRC
- there are plausible, non-arbitrary grounds for checking the tax position of the person.
When completing the reason for the request you should say why there is a potential risk, for example
- how was the person identified
- is there an open or pending enquiry
- what, if any, other information is there to suggest a risk, for example third party information
- why it is a risk?
Note HMRC is initially limited to 500 requests a year. OCU will make the decision as to which requests are made. They will be guided in this by the amount of yield, in particular if HMRC can demonstrate yield in excess of £10,000 per request the agreement allows for the number of requests per year to be increased.
It is therefore important that you consider the grounds for your request carefully. You will need to convince the OCU that there are plausible grounds for the request. OCU may request further details if necessary.
- You have an open enquiry into Mr Walters. You have established that his business records are inaccurate with indications of undisclosed cash turnover and that his returned taxable income for the last six years would not support his apparent lifestyle. He has admitted low levels of undisclosed income but not sufficient to satisfy the discrepancy. You have information that he has flown to Geneva six times in the last two years. This would represent plausible grounds for a request.
- You have an open enquiry into Mr Brown. You have established that his business records are unreliable but there is no definite indication of suppressed sales. His taxable income is low but he claims that he has relied on loans from family and friends. He has been on holiday to Spain during the year. There is no direct indication of an undisclosed bank account in any location so these would not provide plausible grounds for a request.
Whether plausible grounds exist will always be a matter of judgement and analysis based on the weight of evidence before you. You do not necessarily need to demonstrate a direct Swiss connection to your case.
You will need the approval of an authorising officer before you are able to send the request to the OCU, see CH260000.