Offshore account holders 'must declare tax'

Workers looking to transfer money abroad to an offshore bank account need to make sure they declare gross interest on their tax returns.

This is the advice issued by Yvonne Goodwin, managing director of Yvonne Goodwin Wealth Management, who explained HM Revenue & Customs (HMRC) is "very strict now on checking offshore accounts for non-disclosure and tax evasion".

She said she advises her own clients to use UK banks that hold a UK banking license and said those who opt to open an account with an institution not based in this country need to check where the firm is registered and what compensation rules will apply should the bank collapse.

Ms Goodwin noted that while she "rarely" finds offshore accounts that offer a more competitive rate of interest than those available in the UK, they can be ideal for individuals who are considering emigrating.

"If someone is likely to become a non-resident of the UK, then it may be useful to hold accounts in another country or another currency," she observed.

HMRC has been clamping down on those using offshore bank accounts to avoid paying tax and recently signed an agreement with the Swiss government that will see British taxpayers who hold accounts in the country be forced to make one-off payments for any past liabilities they have not accounted for.

A new withholding tax of 48 per cent and 27 per cent on gains will be applied to those who have failed to declare income to HMRC, while those who do will have to pay a one-off deduction of between 19 and 34 per cent if they need to settle any tax owed.

David Gauke, exchequer secretary, who signed the agreement with Swiss finance minister Eveline Widmer-Schlumpf, said the agreement will help recoup "billions of pounds of unpaid tax" from offshore accounts.

Posted by Thomas Smith

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