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Last Updated: Tuesday, 25 September 2007, 12:05 GMT 13:05 UK
UK taxman targets offshore wealth
HMRC office
Big tax evaders could be prosecuted
British tax authorities are broadening their search for tax dodgers who use offshore accounts, an HM Revenue and Customs official has told BBC News.

The Revenue is to press small private banks that cater for wealthy clients to agree to hand over details of their customers' offshore accounts.

The Revenue is asking a variety of financial institutions to cooperate.

The Revenue is already pursing some 40,000 UK citizens who have offshore accounts with High Street banks.

Following a legal ruling, Barclays, HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB have already been asked to hand over the names and details of their UK customers who had accounts with branches based offshore.

This amounted to some 400,000 accounts, based in locations such as Isle of Man, Guernsey and Jersey, which the Revenue is currently trawling through to try and root out those who have not paid the tax due.

Wider audit

Accountancy firms describe the Revenue's efforts to broaden its investigation as a "filtering down exercise", with the banks with the greatest volume of offshore accounts topping the list.

"It makes sense," said Stephen Camm, head of PricewaterhouseCoopers tax investigations.

"The Revenue looks to audit the financial firms that have a high potential of being the most profitable for its efforts in terms of the amount of tax being avoided."

While self-employed entrepreneurs and freelancers might hold an account at an offshore branch of a major UK bank, the customers of wealth managers and private banks will be more financially sophisticated, according to Mr Camm.

Encouraged by a partial amnesty until the end of June, about 60,000 people have owned up to unpaid taxes.

They have registered to pay the outstanding amount plus interest, and in doing so took advantage of the Revenue's reduced penalty charge of 10% of the total amount owed.

This leaves about 40,000 people whom the Revenue believe have not complied fully with UK tax law and who could now face fines up to 100% of their backdated taxes, and in extreme cases, prosecution.

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