The taxman yesterday insisted it had not failed in its attempt to raise £1 billion in unpaid tax on offshore savings as it launched a last-ditch appeal for taxpayers to come forward.

Letters will be sent to 200,000 UK citizens who hold offshore bank accounts encouraging them to declare any unpaid income tax, HM Revenue & Customs announced yesterday.

In April, HMRC launched an offer to 400,000 bank account holders which promised to cap penalties at 10 per cent for those who came forward to declare their tax debt.

However, HMRC yesterday revealed that a mere 8000 individuals had signed up to the reduced penalty offer. The programme requires taxpayers to notify HMRC of an intention to disclose by June 22. Outstanding tax must be then declared and paid by November 26.

An HMRC spokesman also yesterday confessed officials were unable to confirm addresses for over 100,000 individuals suspected of failing to pay tax on offshore holdings.

The spokesman said: “We are conducting more checks so that the letters go to exactly the right people.”

Individuals domiciled in the UK must pay tax to HMRC on any income earnt whether it is kept here, or in an offshore bank account. Many taxpayers do not realise they must also pay tax on the interest their offshore funds earn.

As a result, HMRC estimates there is up to £1.8 billion in unpaid tax held in offshore bank accounts.

Accountants have queried the Government’s decision not to advertise the offer more widely, as HMRC delegated sole responsibility for spreading word to the offer to five high street banks and the media.

In its letter, HMRC gives warning that those who do not come forward will be the target of an investigation. Those investigated after 22 June may be liable for penalties amounting to 100 per cent of the tax debt.

Mike Warburton, from Grant Thornton, said: “The Revenue have taken a low key approach. It hasn’t worked. To date it’s been a disappointment.”

However an HMRC spokesman yesterday said the scheme was “definitely not” a failure, adding that HMRC expects a last-minute surge in disclosures.