Britain wins access to offshore bank accounts

More than 300 banks will be forced to give British tax authorities details about customers holding offshore bank accounts following a ruling yesterday.

The ruling by a tax tribunal clears the way for HM Revenue & Customs, the tax authority, to seek information from the banks as it offers Britons the chance to settle unpaid liabilities at a lower penalty rate of 10 per cent.

The move is part of international efforts to crack down on tax evasion and follows an agreement between Britain and Liechtenstein on Tuesday to encourage British clients with secret accounts in the Alpine state to disclose billions of pounds in untaxed money.

Britain is offering people with offshore accounts the chance to come clean on their liabilities by next March to qualify for the reduced penalty rate. Anyone who does not would face a penalty rate of 30 per cent and an increased risk of criminal prosecution.

Treasury minister Stephen Timms welcomed the ruling.

"It is wrong that some people evade paying their fair share of tax by hiding assets in offshore accounts. Today's ruling represents real progress in creating a level playing field for all taxpayers," he said.

The credit crisis and the pressure on government budgets have given fresh impetus to long-running efforts to crack down on tax avoidance. "The UK tax authorities are not only growing teeth, but are now clearly using them," said Simon Newsham of Newshams Tax Solicitors.

"This reflects a change which we have been witnessing over the last few years and HMRC are becoming far more aggressive (and somewhat US-style) in their approach."

The ruling applies to 308 banks with a presence in Britain, many of them foreign owned. If a bank puts savings offshore, it is the responsibility of the investor rather than the bank to declare the income for tax purposes.

The crackdown extends measures launched two years ago which applied mainly to customers of Britain's main high street banks.