Four UK High Street banks - understood to be HSBC, HBOS, Royal Bank of Scotland and Lloyds TSB - are to be forced to hand over details of their clients' offshore bank accounts after Revenue & Customs won consent from the Special Commissioner on 1 February 2007.
Revenue officials will now search the records of an estimated 100,000 customers for information on UK-domiciled individuals who have not declared income on money kept in offshore centres such as the Channel Islands. The move is expected to yield £275m in unpaid tax.
Special commissioner John Avery Jones said: "in my view, the information that the Revenue has already obtained raises serious questions that merit investigation and cannot be investigated by any other means". Barclays was the subject of a similar ruling in April last year, which Revenue & Customs estimated would yield £1.5bn on unpaid tax.
Although it has been legal to hold money offshore since the relaxation of exchange controls in 1979, it is illegal to conceal the interest earned. But the ruling is thought unlikely to force the disclosure of secret bank accounts in Switzerland and some other offshore jurisdictions.
Revenue & Customs is proposing to reduce the burden on its investigators by encouraging individuals with undeclared offshore accounts to come forward in a partial amnesty which would offer reduced penalties of 10% of the maximum for a limited period. Investors could still face a bill for up to 20 years of unpaid tax and interest.
Under the proposals, investors would be given six weeks to disclose the existence of an offshore account, with a further four months to make a complete disclosure and pay the tax bill.
Revenue & Customs is expected to announce the concession this spring when it has received information from the banks. Such a schedule will give account holders little time to get adequate advice.
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