Bigger penalties on way for the offshore cheats

Offshore tax evaders face even bigger fines once the current amnesty for them to declare their overseas bank accountants runs out on 4 January.

"I would encourage anyone concerned about their offshore tax affairs to take advice as soon as possible and certainly before the deadline expires on 4 January," Paul Harrison head of tax investigations at KPMG said. "There's an even bigger stick on the horizon, and time is running out."

Under the amnesty, anyone who declares their offshore bank accountants and pays the tax due on them faces a fixed penalty of an extra 20% of that tax.

Under new proposals put out by HM Revenue & Customs, people either declaring offshore accounts voluntary or found out by the authorities after the amnesty ends face much stiffer penalties of up to 100% of the tax due.

Harrison said: "In effect they are treating this as deliberate and therefore the worst kind of offence. HMRC will be receiving information from as many as 300 financial institutions which will lead them to those individuals with offshore bank accounts."

In another tweak to the regulations, anyone who opens a new bank account in one of the "high-risk" countries like the Cayman Islands and British Virgin Islands will have to declare it to HMRC within 60 days. Failure to do so could result in a fine of twice the tax which has been evaded.

Tax avoidance schemes also face even greater tightening after HMRC outlined five new measures encouraging accountants and advisers to reveal such schemes more quickly and in more detail.