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The trade body representing the UK banking industry has called for a compromise on HMRC attempts to track down investors who owe taxes on overseas bank accounts.
The Revenue is seeking details of offshore accounts, but is facing resistance from financial institutions because of issues over privacy.
The British Bankers' Association (BBA) believes 'a balance must be found between maintaining appropriate customer confidentiality and tracking down people who fail to pay their taxes'.
Banks and building societies have raised concerns over HMRC's proposals for institutions to complete a questionnaire to determine if they must disclose details of offshore accounts held by UK residents.
BBA said the industry does not wish to shield those avoiding their legal obligations, but it needs to protect its long standing reputation for care and concern for the customer.
'We do want to work with HMRC on any future voluntary disclosure regimes,' BBA remarked. 'We do not believe that a questionnaire assures banks and building societies that [the Revenue] has sufficient evidence to satisfy the necessary legal criteria.'
The trade body also claimed that HMRC have underestimated the time needed for institutions to carry out the sort of reviews being sought.
BBA chief executive Angela Knight said: 'The relationship between customer and banker is very precious, and while we support efforts by the Government to ensure arrangements are in place so people pay the tax they owe, this needs to be balanced by regard for the law and personal privacy'.
She added: 'Banks comply with the law, and have no desire to shield people who fail to pay their taxes. However, at a time when people naturally question the ability of the authorities to take proper care of personal data, we think it would be premature to provide more information on off-shore account holders to Revenue and Customs.
'We will continue to work closely with HMRC on how they can achieve their legitimate goal of ensuring the correct tax is paid, while always seeking to maintain the traditional customer privacy which has served us well.'
