Page last updated at 11:09 GMT, Monday, 2 November 2009

Tax dodgers are targeted online

Dave Hartnett 5
Dave Hartnett is the Permanent Secretary for Tax

The taxman has taken to social networking for the first time to warn people to come clean about offshore bank accounts.

Dave Hartnett, permanent secretary for tax at HM Revenue and Customs (HMRC), has posted a video warning about tax dodging on YouTube.

HMRC is running its second disclosure initiative calling on people to settle their tax bill.

The deadline for people to say they will come clean is 30 November.

It is not illegal to have offshore accounts, but anyone who receives savings and investment income from abroad needs to declare it on their tax return.

They might have to pay UK income tax as a result, but if they have paid foreign tax on the income they might be able to deduct this.

'New powers'

The first offshore disclosure campaign in 2007 was aimed at customers of the big five High Street banks and two others. As well as raising £450m, the Revenue learned a great deal about tax dodgers.

The taxman now has more powers and more information
Dave Hartnett, HMRC

In September, HMRC said it was giving people a second chance to come clean and pay tax, plus interest and limited penalties, on money they may have been hiding in bank accounts abroad.

People with money in offshore accounts run by 300 UK and foreign banks are the latest group to be offered a chance to confess to hiding taxable income.

"For some people, offshore bank accounts and tax havens typically conjure up images of exotic and far away places, well out of the reach of the taxman at home," Mr Hartnett says in the two-minute video.

"Well, life's just not like that any more. The taxman now has more powers and more information."

'Not hollow threat'

The video alerts people with an intention to disclose that their notification must be made to HMRC by 30 November. Disclosures can be made on paper up until 31 January, 2010, and electronically up to 12 March, 2010.

Those who disclose before the deadline will have their penalty capped at 10% of the unpaid tax, or 20% if they failed to declare during the first disclosure campaign.

Mr Hartnett says in the video that the warning is "not a hollow threat".

Those people who fail to come forward before the time limit and are found to have undeclared tax liabilities will face a fine of at least 30% of the unpaid tax, but can be fined up to 100%.

They are also more likely to face prosecution.

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