Revenue begins offshore accounts crackdown

HM Revenue & Customs has stepped up efforts to curb the number of people evading tax through offshore bank accounts

Tax authorities have sent out about 500 letters to people with funds in offshore tax centres, giving investors 30 days to explain why they haven't declared interest on income in the UK.

The Revenue is also increasingly requesting banks divulge information on UK citizens who hold accounts offshore.

The move is part of a pilot test by the Revenue to tackle a 'significant problem' of UK citizens using offshore bank accounts to avoid paying tax on interest accrued.

'These letters are about ensuring that those with off-shore accounts pay the right tax like everyone else. Our aim is to avoid the need to open a formal enquiry if at all possible and to ensure that the rules have been followed. We have issued these letters in order to achieve this on an informal basis and with the minimum of fuss,' said the Revenue.

Offshore accounts are legitimate investment vehicles as long as people declare any interest that arises in their tax returns. 'however, we very often find them associated with serious tax evasion,' the taxman said.

In May the Special Compliance Offshore Fraud Group signalled its intention to take a stricter line with those who hold offshore bank accounts when it appointed 11 new investigators.

But tax experts have voiced concerns that the crackdown could target innocent taxpayers because authorities won't have time to conduct in-depth reviews.

The British Bankers' Association said it is in regular talks with the Revenue and although tax authorities can request specific information on accounts holders it must go through the correct channels.

The UK initiative follows the introduction of the European Union savings directive last month requiring offshore centres to share information on bank accounts of EU citizens or levy a withholding tax.

The crackdown on tax evasion has accelerated this year in the UK this year as part of a multi-pronged plan to tackle corporate and personal tax evaders in a bid to recoup millions in lost taxes each year.

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