FAMILIES of people who have recently died have been warned that they could be pursued by HM Revenue & Customs for unpaid tax, following the government’s offshore crackdown.

The Revenue is putting pressure on banks and building societies to hand over customers’ offshore accounts, including those of savers who have died.

It is not illegal to hold money in an overseas bank account, but taxpayers resident in the UK must pay income tax on their savings interest through their self-assessment forms. Anyone who has failed to declare this tax could face a payment order for the tax due plus interest, as well as penalties that can be up to 100% of the amount owed – and dying is no escape.

Toby Harris at the Society of Trust and Estate Practitioners said: “The Revenue has the power to collect unpaid tax from the families of the deceased up to three years after death. This could come as a shock to families, who may not even realise relatives had an offshore account.”

Harris said it was usual in such cases for the Revenue to demand tax and interest but not impose penalties. Payment of the tax has the effect of reducing the deceased’s estate, therefore if the family paid inheritance tax they can claim a refund.

Taxpayers who came forward under a recent amnesty have until November 26 to make full payment of the tax owed, plus interest and penalties.