The taxman is on the rampage – and heading to an offshore account near you. In a landmark ruling, Barclays has been forced to divulge details of hundreds 0f thousand of customers with offshore accounts. HM Revenue & Customs (HMRC) is expected collect £1.5 bn in unpaid tax as a result, according to Ian Cowie in The Daily Telegraph. And the probe is unlikely to stop with Barclays. Accountants are predicting that HMRC could force other banks to open up their record books. In all, about three million Britons are thought to have offshore accounts – and one in five has probably not paid the correct amount of tax, if they have paid any at all.
If you are resident and domiciled in the UK, you have to declare interest on your savings, whether the bank is in Chigwell or the Channel Islands. You are also liable for income tax in the normal way. Penalties for tax dodging can be harsh. If you have failed to declare income, you will have to pay the tax due, plus interest, plus a fine of up to 100% of the unpaid tax. The taxman is no doubt after a much bigger prize than the unpaid tax on undeclared interest.
HMRC suspects that many people, particularly the self-employed, are shoving money offshore because they don’t want to pay tax on their profits, says Lucy Warwick-Ching in the FT. And it looks like its gearing up a wider crackdown. If you’ve been keeping shtoom about an offshore account – whether witting or not – my advice is to start talking.