The crackdown on tax evaders intensified last week with G20 leaders promising to stop the rich from salting away vast sums in offshore havens.

Pressure is mounting as more countries declare their intention to share information with foreign governments that suspect citizens of tax evasion.

Stalwarts of tax secrecy such as Switzerland, Liechtenstein and Monaco have all said they will adopt tax-sharing principles set out by the Organisation for Economic Co-operation and Development (OECD).

Tens of thousands of British people have offshore accounts — many of them offered by high-street banks and building societies such as Nationwide and Alliance & Leicester in the Isle of Man. This is usually for entirely legitimate reasons — perhaps because they have worked abroad or intend to retire overseas.

Offshore accounts may also pay higher interest than their onshore equivalents, and this is paid gross — although you are required to declare it every year.

HM Revenue and Customs (HMRC) is negotiating an “offshore disclosure facility” (OFD) with Liechtenstein, where it would close the accounts of UK residents who have not paid their tax and who did not come forward voluntarily. It intends to extend this to countries such as Jersey, Switzerland and Monaco.

Not all countries have agreed to share information, however. Some “die-hard tax evaders” are expected to move money to countries such as Panama or Samoa, which have not agreed to share information.

Here we explain where we are with offshore tax.

What’s the problem?

People have until recently held money in offshore accounts and not declared their income to the taxman. However, with the onset of the credit crunch, and taxpayers having to bail out banks — many of them with offshore interests — tax evasion has risen on the political agenda.

HMRC says offshore tax evasion costs British taxpayers £900m to £1.5 billion every year, although the Tax Justice Network, a campaigning group, estimates that the figure is more like £18.5 billion.

What is a tax haven?