Tax loophole closure of the week: offshore accounts
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When is a tax dodge not a tax dodge? When it’s an offshore bank account. Yes, the interest in offshore accounts is paid gross; but no, contrary to popular belief, it is not tax-free.
Accountants are warning people to come clean with the tax authorities about any money they hold in offshore accounts after a landmark ruling against a large – but unidentified – financial institution, thought to be a high-street bank. The bank has been ordered to divulge information about customers’ accounts because HM Revenue & Customs suspects it is owed about £350m in unpaid tax by them.
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You should declare any interest on money held offshore on your tax return. If you have failed to make an accurate declaration you should seek advice – and own up to the taxman sharpish. The only people who are exempt from paying UK tax on an offshore account are those that are resident but not domiciled in the UK. You have been warned!
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