Once again, UK residents using offshore planning to avoid tax are being monitored very closely.

However, it is the providers of these schemes that are being even more closely scrutinised by governments and regulators to close the huge leakage of lost tax revenue, whether this be income tax, capital gains tax or corporation tax.

One wonders what the future holds for offshore banking, particularly branches of major UK banks centred in the Channel Islands, the Isle of Man etc.

Traditionally these banks have been used by the wealthy to deposit funds to receive interest gross and untaxed, or simply to secrete funds, not only from Her Majesty’s Revenue & Customs (HMRC), but creditors and even spouses.

Given the crackdown by governments on tax evasion and money laundering, one wonders what the purpose of these offshore centres will be in years to come.

It has been revealed that even now, major UK banks, including those baled out by, and majority-owned by, the UK taxpayer, are indulging in advising customers on tax evasion.

A BBC Panorama investigation has shown the Jersey branch of the Lloyds Banking Group has been advising potential investors of a scheme to route investment income through Hong Kong to circumvent European savings tax.

For a UK resident this is tax evasion, and it will be interesting to see how the Financial Services Authority (FSA) deals with the taxpayer-owned bank and when it concludes its investigation.

At the last G20 meeting, Prime Minister Gordon Brown announced: “There will be an end to tax havens.”

Is this going to apply to government-funded banks offering tax avoidance schemes?

Northern Rock, nationalised and kept alive with £27 billion of taxpayers’ money, is still apparently involved in offshore tax planning promotion through its branch in Guernsey. Its offshore subsidiary has apparently seen deposits almost double to £2 billion since the bank was nationalised.

Although the bank claims to advise customers that it is their responsibility to declare interest in their tax returns, is it enough to propose the tax saving idea and then leave it to the customer whether they breach the rules or not?

Why create the possible loophole in the first place?

Last month, the Government successfully obtained authority to insist that more than 300 UK and foreign banks hand over account details of UK taxpayers with offshore accounts.

Account holders are given the option of coming forward and making a declaration under a form of amnesty, with reduced penalties, but in any event HMRC will get the information in the long run.

In theory, the Revenue can fine people up to 100 per cent of any unpaid taxes linked to offshore accounts. If they come forward between now and March 12, 2010, they will face only a ten per cent fine of the unpaid tax.

A similar campaign was launched in 2007 concentrating on customers of the five major high street banks. HMRC estimated about100,000 people were in this category and 45,000 came forward, paying a total of £450 million.

With the Government’s tax returns getting significantly depleted by the huge rise in unemployment figures in the UK, tax havens are an obvious target for HMRC to obtain more tax revenue.

Dave Hartnett, HMRC permanent secretary for tax, has pointed out that the latest initiative is aimed at everybody with offshore assets, enabling them to benefit from discounted fines.

“This will be the last opportunity of its kind.”

Offshore accounts are not illegal but anyone getting savings and investment income from abroad has to make a declaration on their tax returns.

A sea change seems on its way. Even the previously haven of Liechtenstein has agreed to open up details of about 5,000 UK customer accounts which could have a huge effect on the tiny state, for which offshore banking is a very important source of revenue.

Switzerland, the home of private banking for the ultra-wealthy, has had to fall in line with new global regulations on disclosure.

Last month the United States obtained an agreement that the Swiss banking giant UBS will give the tax authorities details of over 4,000 accounts held by US residents.

Earlier this year UBS admitted to being complicit in tax fraud in the US and agreed to pay $780 million in a settlement against charges that it helped thousands of US clients use Swiss bank accounts to evade tax.

This agreement seems to have dismantled the Swiss secrecy laws to privacy of information for bank customers, another nail in the coffin of offshore tax centres being used to avoid tax.

There are, however, still legitimate ways to accumulate growth and income on assets using offshore tax planning. The point at which the tax may or may not become due is upon withdrawal or encashment of such investments, and that often depends upon the residency of the customer at this point.

With the global co-operation of governments and tax authorities tightening the net, it looks like the opportunities for tax evasion and legitimate tax planning using offshore centres are going to become fewer in the future.

* Trevor Law is a director with Montpelier Group (Europe) Ltd, the privately-owned independent financial advisers at Barston, near Solihull.

E mail: TILaw@montpeliergroup.com