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HMRC wins access to offshore bank account details

Over 300 banks and financial institutions will be obliged to hand over details of their customers’ offshore accounts to the tax authorities.

HM Revenue and Customs (HMRC) has been given the right to demand the information by a ruling of the Tax Chamber of the First-tier Tribunal.

This will enable HMRC to issue banks with compulsory disclosure notices ahead of the introduction of the New Disclosure Opportunity (NDO), the latest, and last, ‘amnesty’ for taxpayers with undeclared funds in offshore bank accounts on which tax may be owing.

The details that the banks will be required to furnish include payments and transfers to overseas accounts that they have handled on behalf of customers.

The information that is supplied by the banks will be then used to double check the disclosures that people make voluntarily on their offshore assets to ensure the two tally and that the correct amount of tax is being paid.

Dave Hartnett, HMRC’s Permanent Secretary for Tax, said: “I know there are people who regret not taking advantage of our Offshore Disclosure Facility in 2007.

“We have successfully applied to get information on the offshore accounts and assets of customers of over 300 further banks. I urge any of them who have unpaid tax liabilities connected to these accounts now or in the past to come forward and make a full disclosure during the NDO because we will use the information provided by the 300 banks to pursue those people who continue to flout the UK’s tax laws.”

HMRC launched its first amnesty, or Offshore Disclosure Facility (ODF), in 2007 and recouped some £400 million in unpaid taxes from 45,000 people holding undeclared offshore accounts with five leading banks.

The NDO is extending HMRC’s investigations to include a further 300 banks.

Under the New Disclosure Opportunity, people who contact HMRC voluntarily will only face a penalty charge on undeclared, unpaid taxes of 10 per cent of what is owed.

In principle, HMRC is entitled to impose a fine of 100 per cent but is hoping that, as in 2007, the reduced penalty will encourage more account holders to come forward.

Higher rate taxpayers with offshore savings accounts need to pay 40 per cent tax on the interest that is generated, irrespective of whether the money is re-introduced to the UK. Basic-rate taxpayers must pay 20 per cent.

HMRC is also tracking tax owed on other assets such as holiday homes which have produced income from lettings.

To qualify for the capped penalty, taxpayers must contact HMRC between 1 September and 30 November to notify that they owe undeclared tax. Those notifying on paper can do so from 1 September to 30 November and those notifying electronically from 1 October to 30 November.

Anyone making an offshore disclosure on paper must get it to HMRC from 1 September 2009 to 31 January 2010 at the latest. Electronic disclosures can be filed from 1 October 2009 to 12 March 2010.

However, HMRC went on to say that people who were contacted during the 2007 amnesty, did not come forward then but do so now will have to pay a penalty of 20 per cent.

Those who continue to fail to declare their liabilities will face penalties from 30 per cent up to 100 per cent.