Tax man clamping down on offshore accounts.
HM Customs and Excise (HMCE) are concerned with the number of UK tax payers who are avoiding UK tax by holding cash in foreign interest bearing accounts. They are urging current and past holders of ‘offshore accounts’ to take advantage of a tax amnesty and declare their interest earned abroad to avoid higher penalties should they be found out. On their web site HMCE claim that they have obtained customer account details from certain foreign banks and are writing to the account holders about the amnesty which ends this Friday. Tax payers that do not respond could, HMCE state, face penalties, interest and possible criminal investigation.
So how does all this concern you? Well, if you have a Turkish bank deposit account earning interest you ‘should’ declare that and the Turkish tax paid to HMCE as it is an offshore account. Thankfully the UK and Turkey have a dual taxation agreement so you won’t be taxed twice but you do need to declare the difference. Sounds complicated doesn’t it? Well it is and the system is even more complicated because tax payers who use the on-line tax return system can’t include earnings from offshore accounts without going to considerable cost to buy a ‘special system’. No wonder people don’t declare.