Threat of reality? According to the UK Daily Telegraph, Inland Revenue is carrying out a crackdown on people evading UK income tax by using offshore bank accounts, i.e. using their credit card to pay for living expenses in the UK.

The American Internal Revenue Service (IRS) carried out its own review on tax evasion through offshore accounts in 2002. Under the IRS rules, American taxpayers are liable for US tax wherever their income is generated. The rules is slightly different in the UK where the ordinary resident is only taxable on its income generated or spent in the UK (that is likely to change next April).

20-25 inspectors based in Liverpool, with a budget of £66 millions, have been assigned by Gordon Brown to target task fraud from British savers in the Isle of Man, the Channel Islands, Gibraltar, Switzerland and elsewhere. A number of banks have already complied with the Revenue's request for co-operation and have forwarded account details to the body.
advertisement. Accountants, financial advisers and credit card companies are likely to follow suit in the near future.

The OECD (Organisation of Economic Cooperation and Development) and the European Commission, have put pressure on offshore centres to combat money laundering and tax evasion and urged banks located in offshore jurisdiction to put in place such anti-laundering processes.

The article of the Daily Telegraph is threatening enough that it could have been written by an Inland Revenue member: "Tax evasion is a crime. Banks who pass depositors' details on to the Revenue would be unable to let the person know they were doing it. It is therefore possible to be under investigation without knowing it."  Funny enough, the Telegraph advert on the page is for HSBC's offshore saving account .

Recommended Partners