Deferred interest accounts (and offshore)

mounts2008

I'm considering investing a reasonable sum of money (£200,000+) for at least three years, possibly longer. Looking to maximise capital growth whilst minimising risk, income is not required.

Deferred interest accounts look interesting, potentially offshore.

Questions:

1) Will the annual 'effective interest' be compounded?

2) Will the above calculation be based on 'gross' interest?

3) Can the tax on the interest be paid at closure rather than each year?

4) In general how secure are offshore savings banks? Are they exposed to sub-prime, CDO etc?

5) What levels of protection are afforded to offshore deposits? Nationwide claims that the UK business would meet an unfunded liabilities of the Intl divsion. But what happens if the UK business was insolvent?!

Thanks!