If you have offshore savings or income from a foreign rental property you have eight weeks to tell the tax man, or face a hefty fine.
If you're one of a number of people with offshore assets, such as a savings account in the Channel Islands or a holiday home in France, watch out -- the tax man has his eye on you!
Although there appears to be a widely held belief that you don't have to declare (and thus pay UK tax) on overseas income, this is in fact untrue. If you're a UK resident, any interest made or rent claimed from overseas property must be declared to the tax man and UK tax paid.
It's reckoned that one in five people are not declaring overseas interest, which according to accountants Grant Thornton could mean that the government is owed around £5bn in unpaid tax, interest and penalties (with £1.5bn from Barclays Bank's offshore accounts alone). Unsurprisingly, the thought of this much money is making the government rub its hands with glee, and plot a way to get it back!
Offshore Disclosure Initiative (Amnesty)
Fortunately, if you are one of the many that has kept quiet about overseas income, it's not all doom and gloom (you can put your passport down -- you don't have to run off to South America just yet). The government has announced an unprecedented amnesty -- declare what you owe within the next two months (until 22 June) and you'll be charged a reduced penalty of 10%, as opposed to the 100% normally charged, which must be paid (with the tax owing) by 26 November.
However, wait until after this date and you could be badly stung. Revenue and Customs officials are planning a crackdown on offshore assets, meaning you will be likely to face a full investigation and have to pay 100% of the tax owing, plus a fine equivalent to 100% of the outstanding amount. What's more, their investigations could stretch back as far as 20 years -- and you could face prosecution, too!
If you were thinking you could avoid the investigation be warned: following a landmark ruling in May last year the big five banks: Barclays, Lloyds TSB, Royal Bank of Scotland, HBOS and HSBC have been forced to hand over details of their offshore customer accounts.
Even those people that don't use a UK account (e.g. those that pay rental income from a French property into a French bank account) are not immune as States in the European Union share information.
Also, be warned that the word amnesty shouldn't be taken too literally. While admitting your tax affairs should just result in a reduced penalty, Revenue and Customs has said that it will be investigating some cases further, and that making a disclosure does not make you immune from prosecution.
So what should you do?
Well you may have nothing to worry about-- if you have declared any interest earned from foreign savings in your self assessment form you should be OK. However, if you are concerned, take a look at the advice given on the HM Revenue and Customs site. In particular, check out its "Making a Disclosure" document.
The key dates to remember are:
22 June (you have until this date to notify HMRC that you wish to make a disclosure);
26 November (you have until this date to make your disclosure and pay).
So if you have offshore savings accounts or earn an income from a foreign rental property that you haven't declared, check out the HMRC website and consider making a disclosure. Do so in the next eight weeks, and pay up in the next five months and you could avoid a hefty fine.
More: HMRC website