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Last Updated: Thursday, 21 June 2007, 11:27 GMT 12:27 UK
Taxman pledges offshore vigilance
HMRC office
Hundreds of thousands of people now face a tax crackdown
The UK's top taxman has warned there will be no let-up in the campaign to track down unpaid tax hidden abroad.

About 400,000 people have until midnight on Friday to tell the authorities they will be making a full disclosure of their offshore savings.

Dave Hartnett, director general of HM Revenue and Customs (HMRC), said some were clearly criminals who had lied about their tax affairs.

A thousand people an hour are now admitting to HMRC they have tax to pay.

Mr Hartnett said some of the people with accounts that had been uncovered would in fact have their tax affairs in good order, while others might simply have been muddled.

But he said: "There are others who have deliberately hidden money offshore and still more who have lied to us in the past about the accuracy of their tax returns and continue to do so - and I think they are criminals."

Hidden money

The authorities launched their campaign earlier this year to force the disclosure of money salted away offshore, after winning the right to demand from UK banks the details of all their customers' offshore bank accounts.

We are going to start looking at all the information for people who have not made disclosures to us and trying to identify those who have got hidden income
Dave Hartnett, HMRC

Information from the seven biggest UK banks has revealed the existence of 400,000 offshore accounts, owned by UK taxpayers, which were previously unknown to HMRC.

It is perfectly legal for a UK citizen to have an offshore bank account and to put money in it.

But HMRC has long suspected that many people have been failing to declare and pay tax on the interest they have earned on this money.

In some cases, the accounts will also have been used to hide money on which income or capital gains tax was not paid in the first place.


The incentive for these people to confess the existence of any unpaid tax is an offer by the HMRC to levy a penalty of just 10%.

Barclays headquarters in Guernsey
Barclays bank in Guernsey was the first target of the Revenue last year

That is much lower than the normal penalty for failing to pay tax, which can be up to 100% of the unpaid tax.

But the people who take advantage of the HMRC's "offer" will still have to pay that tax, plus interest which could run to very large sums if the tax has been unpaid for a number of years.

This has led to accusations from some in the accountancy profession that the campaign is not sufficiently generous to encourage disclosure by account holders.


So far, about 31,500 people have contacted HMRC to tell them they will be making their extra payment by the next deadline of 26 November.

But Mr Hartnett made it clear he would still be pursuing those who have failed to come forward.

"After 22 June, we are going to start looking at all the information for people who have not made disclosures to us and trying to identify those who have got hidden income."

He repeated that those still trying to hide money would face penalties much higher than the 10% currently on offer, and that some individuals would be prosecuted.

HMRC will also start writing to 500 other banks with a base in London, mainly foreign-owned, to ask them to provide similar information about the offshore accounts of their customers.

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