The Bank of Ireland was “positively encouraging inheritance tax evasion in the UK” in the 1990s, the head of legal services in AIB UK told a meeting with a criminal law expert in 2003, leaked documents show.
The meeting was held to review whether AIB operations in Jersey and the Isle of Man might have been guilty of any criminal offences in relation to their trust operations in the context of the Bank of Ireland in Jersey having disclosed information about its Jersey trust business to the UK’s Inland Revenue.
Details of how AIB reacted to matters linked to its trust business are included in leaked documents from the Isle of Man law firm Appleby, which provides legal services to AIB.
A meeting held on November 27th, 2002, with tax expert Kevin Prosser QC was attended by the chief executive of AIB in the Isle of Man Diarmuid Lynes, as well as Sean Dowling, director of AIB Isle of Man, Ray O’Connor, head of AIB group taxation, and others, including lawyers from Dickinson Cruickshank & Co solicitors, Isle of Man, a firm that would later merge with Appleby. (Mr Dowling was to later become a partner with Appleby, Isle of Man).
It appeared Bank of Ireland in Jersey had handed over data on its trust operations to the Inland Revenue following a legal request that it do so. Mr Prosser told the meeting that he did not believe that Bank of Ireland itself had made a tax settlement [arising from its involvement with the trusts]. “He thought that there was an arrangement between the Bank of Ireland and the [UK tax authority] that in return for getting the information from the Bank of Ireland, no tax would be charged.”
Trustee
The meeting discussed what approach AIB should take with the Inland Revenue, whether the bank itself might owe tax due to it having acted as a trustee, and whether it should ask the Inland Revenue to do a deal similar to the one negotiated with Bank of Ireland.
The Inland Revenue’s dealings with Bank of Ireland were also discussed at a meeting with criminal law expert Edmund Lawson QC in February 2003. The meeting was attending by, amongst others, Mr Lynes, Mr Dowling, Mr O’Connor and Tiana Peck, head of legal services with AIB UK.
During a discussion about Bank of Ireland having given information about its Jersey trusts to the Inland Revenue, Ms Peck said it was her understanding that the Bank of Ireland “had been positively encouraging inheritance tax evasion in the UK, and that that was not something that AIB have knowingly undertaken as a group”.
Mr Lynes said AIB had tried for many years to have a rapport with Bank of Ireland, but did not think Bank of Ireland had been open with AIB “about that type of business but he was certain that they were worse than AIB had ever been”.
Mr Lawson said that dishonest practices involving inheritance tax could involve possible criminality by AIB in relation to conspiracy to cheat the revenue and conspiracy to defraud. There could also be money-laundering offences involved, with the proceeds of criminal conduct arising from tax evasion.
The discussion included consideration of whether AIB offshore might have a liability for inheritance tax due on trust funds, and whether branches in the UK might have a duty to file reports with the UK authorities as the bank was concerned with the making of settlements into the offshore trusts.
Financial advisers
The money in the trusts “mainly comprised funds previously held offshore with AIB” and financial advisers outside the bank might not have been involved in the establishment of the trusts, the note said.
“There is, therefore, the further concern that funds in the ‘live’ structures in question have never been disclosed to the Inland Revenue, and, as such, may be regarded as the proceeds of tax evasion, liable to be reported to the police before there are any further dealings with the trust assets.”
A spokesman for Bank of Ireland said it was group policy to fully comply with all the requirements of the tax legislation in the countries in which it operated.
He said Bank of Ireland closed the last of its retail operations in the Channel Islands in June 2014 following a general business review.
