A partial amnesty for thousands of tax evaders who hide money abroad is being drawn up by tax inspectors.
Proposals to encourage investors with undisclosed offshore accounts to come forward are under serious consideration by Revenue & Customs, although they have not yet been agreed by ministers.
The offer, which is likely to cap penalties at a 10th of their current maximum, would be designed to encourage individuals to disclose their offshore holdings, in centres such as Switzerland and the Channel Islands.
Holders of undeclared overseas accounts are thought to include people with overseas holiday homes and people who earned money overseas.
Jeanette Harwood of Walker Morris, a professional services group, said she understood that the Revenue’s own research had estimated that more than €267bn ($180bn) was held by UK residents in 13 offshore financial centres. Jersey was the most popular centre for UK residents.
The concessions would be timed to coincide with a legal ruling expected to force a group of high street banks in Britain with international branches to divulge information on clients’ with overseas accounts.
The banks would be asked to write to their customers, informing them about the Revenue’s voluntary disclosure offer at the same time as telling them that their details had been handed to the revenue.
This legal move, expected early next year, is likely to have a similar impact on the banks as a landmark judgement concerning Barclays bank in April. By forcing Barclays to hand over records of its customers with offshore accounts, the Revenue said it expected to collect an extra £1.5bn in unpaid tax.
The government is likely to avoid using the term “amnesty”, as it will reserve the right to prosecute in the most serious cases. Moreover, investors will face significant financial costs even if they take advantage of the reduced penalties. The Revenue, which can go back up to 20 years to recover unpaid tax, is not expected to offer any concessions on the interest costs.
The offer is likely to be extended for a limited period, after which investors would face heavy penalties if their accounts are uncovered by an investigation. Advisers said that people who might be at risk of prosecution are high-profile individuals, particularly those in positions of responsibility or trust.