JP Morgan workers have been ordered to pay tax - or face legal action - over allegations the firm transferred salary payments offshore, Sky News has learned.
HM Revenue and Customs (HMRC) deemed the money as "disguised remuneration" and not retirement benefits as claimed.
Workers and executives have been told they must agree to pay up to 40% backdated income tax, 1% National Insurance contributions and interest accrued by December 7.
JP Morgan Chase and Co has agreed to pay 12.8% NI contributions for those who accept the settlement terms.
Those who do not agree to the terms face the threat of legal action by the Tax Office.
Sky News understands the money since classified as earnings by HMRC was transferred to Jersey from 1998, with most transferred from the 2005/6 tax year onwards.
The specified amount paid by individuals to the Tax Office to avoid litigation will be determined ultimately by how many agree to the settlement terms on offer. The investment bank employs thousands of people in the UK.
In a letter to the head of JP Morgan's tax department dated September 10, HMRC said: "As you are aware, the Government put in place legislation in 2011 to put beyond doubt the tax treatment of employee benefit trust arrangements.
"In addition, HMRC continues to robustly challenge the taxation treatment of such arrangements under previous legislation.
It adds: "In this context and where we are unable to agree a settlement HMRC will continue to formally progress its enquiries into the taxation treatment of the trusts."
Last year HMRC contacted more than 2,000 employers and offered settlements over disputedemployee benefit trusts (EBTs).
Earlier this year action was taken by HMRC against UBS and Deutsche Bank over EBTs, which contested the Tax Office claims.
HMRC has estimated that up to £1.7bn of tax and NI contributions were at stake in EBTs, including the "dependent fund" plans operated by JP Morgan.
The investment bank's staff who were part of the employee benefit trusts of 1998, 2006, 2007 and 2008 and the 2010 executive retirement plan are affected by the HMRC action.
The ruling impacts both current and former UK-based staff, whether or not they are British citizens or foreign nationals.
The employees' Jersey tax haven funds have been managed by subsidiaries of the Royal Bank of Canada (RBC), which describe the island as "tax neutral".
RBC's wealth management section actively promotes the benefits of using the island for affluent individuals.
"The chief preoccupation of most ultra high net worth families is wealth preservation," RBCexplains on its website .
"Only by structuring their affairs legitimately and with the advice of professionals, including lawyers, accountants, trust and tax experts, private clients will be able to protect their assets."
RBC Europe Ltd has offered JP Morgan workers collaterised bridging loans of more than £250,000 to fund the Tax Office demand.
JP Morgan's private bank has also offered financing arrangements for those who need more than £300,000, or mortgage arrangements in excess of £1m, to facilitate the settlement payments.
Helplines have been set up for workers in regard to the Tax Office offer by JP Morgan, RBC and advisers KPMG.
JP Morgan still disputes the offshore payments as being salary but has agreed to the settlement to avoid litigation under the recently enacted Disguised Remuneration legislation.
A JP Morgan spokesman told Sky News: "Our employee trust has always been transparent to HMRC, and its independent trustee has consistently paid taxes in accordance with UK tax law.
"In addition to taxes paid by the trust, JP Morgan has paid, on average, more than £1bn of corporation and payroll taxes to HMRC annually over the past decade."