Offshore Account HM Revenue

Jackjack21

Hi,

If i open an offshore account would the HM revenue need to be notified?

Loughton_Monkey

If you are a UK taxpayer, you do not need to 'notify' HMRC that you have opened an Offshore account. You will, however, be duty bound to notify any interest you have gained from it. If a European Offshore bank is used, you will probably find they will, in any case, deduct 15% "Withholding Tax", which you can get back from HMRC if you are not liable for tax.

Most Offshore banks will, in any case, co-operate with HMRC in any legitimate enquiries they may make. Seeking to avoid tax by, for example, using an Offshore Account without declaring interest is a crime. Seeking to avoid tax by receiving earned income into an Offshore account without declaring the income (let alone the interest) is an even bigger crime.

Degenerate

Loughton_Monkey wrote: »

Seeking to avoid tax by, for example, using an Offshore Account without declaring interest is a crime. Seeking to avoid tax by receiving earned income into an Offshore account without declaring the income (let alone the interest) is an even bigger crime.

You ought to replace "avoid" with "evade" above for clarity.

The ways to legally avoid tax using offshore means generally involve going through some sort of offshore trust or company (IBC) so that income is not technically earned by you, but a separate legal entity. You have to have significant net worth for this to be worthwhile.

Mark_In_Hampshire

Just to add to this, HMRC recently launched a campaign to get holders of offhore accounts to "fess up" to their existence citing the most lenient treatment for those who did so, and threats of death/torture/trampling on graves for those who did not (I may be exaggerating a bit there)

If you're self employed you may be on the radar anyway and as above HRMC will target those who they believe most likely to be attempting to evade first. Someone with 1000 EUR ticking away in a savings account might not fall within that, but someone self employed shifting reasonable amounts of cash might be.

Porcupine

Loughton_Monkey wrote: »

If you are a UK taxpayer, you do not need to 'notify' HMRC that you have opened an Offshore account. You will, however, be duty bound to notify any interest you have gained from it. If a European Offshore bank is used, you will probably find they will, in any case, deduct 15% "Withholding Tax", which you can get back from HMRC if you are not liable for tax.

You don't have to pay Withholding Tax, you can opt to receive interest gross. Even if you pay WT, you still have to pay any excess tax owing to HMRC. So whichever way, assuming you are liable to pay some UK tax you need to declare the income (that probably means doing Self Assessment). The hassle may not be worthwhile, unless you have a good reason.

Loughton_Monkey

Degenerate wrote: »

You ought to replace "avoid" with "evade" above for clarity.

The ways to legally avoid tax using offshore means generally involve going through some sort of offshore trust or company (IBC) so that income is not technically earned by you, but a separate legal entity. You have to have significant net worth for this to be worthwhile.

Yes. Slap on wrists accepted. Evading tax is illegal. Avoiding tax, in the normal context, is legally reducing one's tax bill.

My impression is that the OP, here, based on his other posts, is trying to hide a source of income from HMRC by using an offshore account.

Loughton_Monkey

Porcupine wrote: »

You don't have to pay Withholding Tax, you can opt to receive interest gross. Even if you pay WT, you still have to pay any excess tax owing to HMRC. So whichever way, assuming you are liable to pay some UK tax you need to declare the income (that probably means doing Self Assessment). The hassle may not be worthwhile, unless you have a good reason.

This may be true about 'gross'. However, it seemed not in my case.

I happened to have Offshore Accounts when working in Asia, not liable to UK tax at all. The Withholding tax was introduced roughly at the time my overseas work was finishing, and would shortly return to UK - where I would start to become liable for UK tax, but not, in fact, have enough UK earnings to pay any.

Firstly, the bank would not pay interest 'free' of withholding tax, believing, I think, it was an inflexible EEC edict. Then getting a refund of it from HMRC was another nightmare since they constantly refused to believe it was "Withholding" tax. [Bank computers just called it 'tax']

Hopefully, all this confusion and mess is sorted out now.