UK business and financial adviser Grant Thornton is warning that a recent court ruling is likely to affect thousands of British owners of offshore properties who make use of offshore bank accounts.

The ruling, against Barclays Bank, means it must disclose details of offshore accounts held by British residents to the UK tax authorities.

This ‘could cause a headache for some and be a grey cloud for many more’, said the accounting firm.

‘This could affect the increasing number of people with overseas property as many are likely to have offshore bank accounts’, said Grant Thornton tax investigations partner Charlie Hall. ‘Anyone who holds an offshore account or property and who comes to the notice of HM Revenue and Customs is likely, to say the very least, to receive an "enabling" letter from HMRC inviting them to account for what they hold and how they acquired it, and to consider whether any UK tax arises from its possession’.

Although only Barclays Bank has been identified, it is expected HMRC will soon demand similar details from other banks. Barclays Bank alone has 11.1m current accounts with £78.3bn of customers’ deposits and assets under management. HMRC has predicted £1.5bn in unpaid income tax will be recovered as a result of the Barclays Bank disclosures alone.

'As more people invest in property abroad, there may be a significant proportion who do not realise that assets in offshore accounts are liable to UK tax. Anyone, subject to their tax status, who receives rents or interest from an overseas property or investments will need to declare that income on their UK tax returns and will need to pay tax in the UK on any gains or profits made when they sell the property’, said Hall.

‘Tax may also arise overseas, and will need to be paid overseas and set off against any UK liabilities. Failure to declare liabilities on overseas assets can lead to substantial charges of interest and penalties as well as the recovery of unpaid tax, and could put individuals in jeopardy of prosecution either in the UK or in the overseas host country’.

The source of the funds used to buy the property or open the investment account will also be the subject of attention from the UK taxman, the firm advised. ‘In many cases, the tax inspector assumes from the outset that the property has been purchased from untaxed funds and assumes that it is rented out. A taxpayer who has purchased the property on retirement or via a UK mortgage, or by releasing the equity on their UK property may also be targeted as a potential tax cheat, and may be required to produce bank records going back several years to "satisfy" HMRC’.

Grant Thornton senior tax manager Maurice Fitzpatrick said there are often perfectly legitimate reasons for UK taxpayers to have offshore accounts. ‘For individuals with property abroad, it often makes sense to have a bank account overseas to pay utility bills and other bills’.

In the case, decided upon by special commissioners, HMRC said it knew of 9,300 Barclays customers with addresses in Britain and accounts outside the UK but fewer than a fifth of them had filed UK tax returns. Fewer than a fifth of those who did complete tax returns - or just 3.5pc of the total - declared any foreign income.

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