British taxpayers with money and assets overseas, and who should have paid tax but have not done so, are being given another chance to come clean.

HM Revenue & Customs’ (HMRC) New Disclosure Opportunity (NDO) provides a window to declare overseas assets and pay tax due, plus interest and a modest penalty — while avoiding potential prosecution and public naming and shaming.

Those who ignored the last such opportunity in 2007 may want to think again. HMRC’s access to information is increasing, with more than 300 financial institutions now required to give details about customers holding offshore accounts. The chances of being caught evading tax have significantly increased.

Those who could benefit include individuals perhaps seduced by adverts promoting gross interest payable offshore, not realising that this interest should have been declared and UK tax paid. There may be people with offshore assets inherited from their parents, sometimes never declared in the deceased’s estate.

Some taxpayers may have determinedly put money offshore, knowingly evading UK tax. A typical example might be a businessman saving for retirement by stacking away a proportion of profits each year.

For those who have decided to come clean, the Revenue has tried to make the process simple. The first step is to declare the intention to disclose before the end of November. The taxpayer then has until March 12 to gather relevant information, perform the tax and interest calculations and file the disclosure form. They must pay the sums due, including the penalty — normally fixed at 10 per cent of the unpaid tax.

There are complexities, however, and professional advice is recommended to reduce the risk of misdeclarations or tax overpayments. For example, the disclosure period can stretch back 20 years, but banks may be unable to supply statements from so long ago. Estimates must then be made, which HMRC will accept if they are reasonable and robust. There are particular complexities when offshore money/assets have been inherited, because of time limits applying to assessments of estates. There are also detailed tax issues where offshore money is held in trusts.

The individual’s status — whether UK-domiciled or not — also has a bearing, due to the remittance basis of taxation for non-doms. Some people may be tempted to claim non-domiciled status when this is not the case, but HMRC is likely to examine such situations closely.

Taxpayers with undeclared tax on offshore assets need to think carefully about their position. Taking the NDO provides the chance to clear the slate, keep the penalty to only 10 per cent and avoid prosecution. This is an attractive option, apart from the potential psychological difficulty of cutting into offshore nest eggs perhaps built up over years.

Some may still gamble on remaining hidden from HMRC's searchlight. This is a high-risk choice. If discovered, they could face a penalty of up to 100 per cent, prosecution for tax evasion, as well as the aforementioned naming and shaming.

? Stephen Camm is a tax partner at PricewaterhouseCoopers