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HMRC crackdown uncovers 500,000 UK residents' offshore accounts

by William Robins on Jun 06, 2011 at 11:15

HMRC crackdown uncovers 500,000 UK residents' offshore accounts

HM Revenue and Customs (HMRC) has discovered half a million UK residents with offshore bank accounts as part of a crackdown on tax avoidance.

According to Treasury minister David Gauke, HMRC is seeking out money ‘hidden’ offshore. He said time was running out for people with offshore accounts to come forward voluntarily and negotiate a tax payment that could be lower than if they waited for HMRC to take action.

Gauke (pictured) said: ‘The options for hiding money offshore to evade UK tax are narrowing all the time and I would strongly urge anyone who is at all concerned that they may not have been paying the right tax on their offshore investments to talk to HMRC.

'The Government has made £917 million available to HMRC to tackle tax cheats and some of this money is already being very effectively deployed against offshore tax evaders.'

HMRC has run a number of amnesties for those with undisclosed earnings in offshore accounts. The most recent, the Liechtenstein Disclosure Facilities (LDF) began in September 2009 and will run until 31 March 2015. HMRC expects to net £3 billion from the LDF.

10 comments so far. Why not have your say?

MP

Jun 06, 2011 at 11:42

I wonder how many of these offshore accounts have been set up on the advice of IFAs etc.

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adrian huston

Jun 06, 2011 at 11:58

I'm a former tax inspector. Many of these accounts were set up on the advice of a high street bank manager - in the 1980s. Now people are scared to touch them. My Radio 4 (Today programme) interview today on the subject is at http://youtu.be/xu6u3Exed3o

HMRC can only go back 20 years, so no worries about the tax on what was first put offshore - just the last 20 years income.

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Festinalente

Jun 06, 2011 at 12:22

Adrian,

Does this include non-doms who paid tax only on a remittance basis?

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adrian huston

Jun 06, 2011 at 12:41

Festinalente,

Up to 2007/08 non-doms only paid UK tax on money sent to the UK. So if they left the money offshore there was no tax offence. After that there are the horrendous £30K charges for those wanting to continue benefitting from non-dom status. This means for most UK-resident people they end up paying tax on world-wide income. So from 2008/09 anu interest earned on offshore depotis must be declared. (HMRC will not get very excited about a late disclosure for 2008/09 and 2009/10.)

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Festinalente

Jun 06, 2011 at 13:01

Many thanks Adrian. That was very clear.

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Anitaki

Jun 06, 2011 at 13:12

adrian is correct - many of these were set up by U K bank managers, who actually encouraged bank clients to their overseas/offshore baranches. This meant money was not lost to the bank and actually helped that manager's referral targets as "referring to our offshore branches" was actually one of the things they were targetted on, again proving that targets are not compatible with good financial advice.. Because people are so apathetic, many such accounts are still there, and there are now many people fearing the next knock on the door. There are many IHT issues too as many relatives of the deceaseds have conveniently "forgottten" this money (only when filling probate forms in). At last, (10 years too late), HMRC have wokemn up.

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Tony Laverick

Jun 06, 2011 at 14:02

I dont know how many UK citizens own properties abroad but it's a lot and I suspect they all have overseas accounts to cover the household bills.

500,000 sounds a lot of accounts but I suspect most will be receiving no interest whatsoever.

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adrian huston

Jun 06, 2011 at 14:12

Tony is right that people with property abroad may well have a non-interest account to pay bills. While I don't think these will be what HMRC is counting, the tax-man may still be interested in these people. There may be no interest earned on the account, but depending on your tax file HMRC might be keen to know how you bought the overseas property in the first place. Also they might wonder if you ever receive money for letting out the property. All must be declared. I have a number of clients who came to us with investigations and HMRC was already aware of the addresses of properties abroad. They can be like a dog with a bone...hard to get them to let go.

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Anitaki

Jun 06, 2011 at 14:30

Agreed. All the 1980's rules have changed. HMRC have got computers and quite technically smart. They have many of the addresses.

HMRC can now discover that people who were drawing unemployment benefit or were declaring £10,000 p.a. self-employed earnings, now live in £half milion+ villas in the south of Spain. It isn't just that, because it is helping track down money launderers too. Its going to get quite hot in Spain

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Phil Castle

Jun 06, 2011 at 19:29

Good news for once, provided any money recovered from those not paying their fair share to the country they live in is used to reduce the tax take on those who do pay their way or earn very little and NOT just spent like Golden Brun would have done.

What would be good would be if the recovery of unpaid tax was linked to a higher personal allowance say 15k before there is any liability to tax and reducing benefits accordingley so that people willing to work and declare tax know they are not going to be taxed until they earn nearer the national average earnings figure.

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