Revenue extends new tax campaign

The Revenue believes it can gets its hands on much more hidden tax

A new campaign by HM Revenue & Customs (HMRC), to flush out unpaid tax on offshore bank accounts, may extend to money hidden in the UK as well.

The campaign is aimed at people with overseas accounts at hundreds of small banks and financial institutions.

To encourage them to confess, the penalty will be limited to just 10% of their unpaid tax, not the full 100%.

That penalty will also apply to any untaxed income these people may have been hiding in the UK as well.

"They will only receive beneficial terms if they make a full disclosure and if that includes other non-offshore funds, then the terms of the new disclosure opportunity will apply to the other funds as well," said an HMRC spokesman.

But the Revenue pointed out that the 10% maximum penalty would not apply to people who had ignored a previous disclosure campaign, involving the customers of five UK High Street banks with offshore operations.

Renewed effort

That previous high-profile campaign in 2007 raised £450m from 45,000 people.

Ronnie Ludwig of accountants Saffery Champness said the latest effort by the Revenue was a last, but golden, opportunity for tax dodgers to pay up.

"Taxpayers with undisclosed funds would be well advised to take advantage of the amnesty when it is launched in the autumn," he said.

"The terms offered - namely penalties limited to 10% of tax due - are as good as it is going to get.

"After the close of the amnesty, potential penalties will skyrocket to 100% of tax due," he warned.

This latest leg of the Revenue' attempt to squeeze unpaid tax from money saved abroad was formally announced in this year's Budget and will run from this autumn to April 2010.

As well as paying the original tax and any penalty, any miscreants will have to pay interest on their unpaid tax, which could become the largest part of their overall bill if the money had been hidden for some years.