Offshore Savers May Face New UK Tax Clampdown

by Robert Lee, Tax-News.com, London

21 October 2008

Driven by the prospect of losing their offshore savings following the collapse of Icelandic savings bank ICEsave, investors’ money is being lured back to the UK by the Government’s GBP50,000 guarantee. But with the money’s return comes possible pursuit from HM Revenue and Customs (HMRC) over the use of offshore accounts for tax purposes.

Gary Ashford, a tax investigations director at Grant Thornton, said: "The current problems in the global savings market may result in many high net worth individuals moving their funds back to the UK in a bid to seek the UK Government's protection.”

He added: “We may well see an increase in retail banks issuing suspicious activity reports as they closely examine the movement of money by investors suspected of failing to comply with current tax legislation.”

It is estimated that 70,000 investors have offshore accounts.

In an effort to recoup lost tax and balance its accounts HMRC hopes to catch those who did not disclose funds under last year’s Offshore Disclosure Facility (ODF), which raised an estimated GBP400 million.

The ODF offered a reduced penalty of 10% for the contacted 200,000 people whom HMRC believed to hold offshore accounts. 60,000 registered for the amnesty with only 20,000 ever making a disclosure or paying any tax.

Grant Thorton expects the Pre-Budget Report to give a clearer indication of the timescale of the new clampdown.

HMRC has stated its commitment to catching anyone who it feels has not adhered to tax laws. Now with the undeclared funds coming back to UK shores some investors may be getting rather a large tax bill this Christmas.

Recommended