Tax warning on offshore accounts

By Paul Lewis
BBC Radio 4's Money Box

From 22 June HMRC will investigate people who do not come forward

People with offshore bank accounts have been warned they have two weeks to declare them - or else.

If they do not reveal all to the Revenue by 22 June penalties on any unpaid tax will be much higher.

Dave Hartnett, a Director General of HM Revenue & Customs, told the BBC that people who were honest had nothing to fear.

Though he said anyone who tried to evade large amounts of tax could face criminal proceedings.

Speaking to BBC Radio 4's Money Box programme Mr Hartnett said: "We have information on about 400,000 individuals with offshore accounts.

"We don't know if they have paid tax or not. We're offering them the chance to come forward and put things right if they need to.

"After June 22 we'll start investigating those who haven't come forward. If someone has paid the right tax they'll hear nothing at all. But if they haven't, we'll be contacting them."

People who simply make a mistake will not be asked for a penalty Dave Hartnett, HMRC

He said 6,600 people had already notified the Revenue they had not disclosed money held offshore, including a doctor with £3m in fees and a chip shop owner with £1m salted away.

But he said anyone who has made a genuine mistake would not be penalised.

"New regulations make it very clear that people who simply make a mistake will not be asked for a penalty. They will be charged interest but no penalty on top if it's a genuine mistake."

Criminal proceedings

Anyone with an offshore account should notify the Revenue by 22 June. They then have until the November 26 to submit the figures.

They will have to pay the full tax owed, going back 20 years in some cases, plus interest and a penalty of 10% of the tax due. No penalties are charged on tax due of less than £2,500.

Anyone who has not declared their position by 22 June will be subject to a penalty ranging from 30% to 100% of the tax owed and possible criminal proceedings.

The interest charged is 7.5% and Mr Hartnett confirmed that when the Revenue owes money to taxpayers it only pays 3% interest. He said that was laid down by law.

Tax is taken automatically from interest in savings accounts held in the UK.

In 2004 the Revenue admitted it had taken £300m too much. A campaign to pay it back resulted in just £73m being returned.

But Mr Hartnett said: "There is a very real possibility that we could have another one."

In 2005/06 the Revenue also overcharged people through the Pay As You Earn system by a total of £500m.

Mr Hartnett told the programme that he was "doing everything we can to put that right".

BBC Radio 4's Money Box was broadcast on Saturday, 9 June 2007 at 1204 GMT.

The programme was repeated on Sunday, 10 June at 1502 GMT.