The department said people have an extra five weeks to alert it to undeclared offshore accounts before its “new disclosure opportunity” ends.

The NDO gives savers the opportunity to declare offshore income with limited penalties and a lesser chance of prosecution. The deadline will move from 30 November to 4 January 2010.

The amnesty was originally announced in July.

An estimated 100,000 people have undeclared income from overseas, from savings accounts or property, but it is understood that fewer than 10,000 have taken advantage of the NDO, according to The Times (of London).

Alistair Darling, the UK finance minister, delivers his pre-budget report statement to lawmakers on 9 December, in which he is expected to touch on issues relating to personal tax, including tax amnesties and issues concerning offshore money. The government has been reviewing its relations with UK offshore centres such as the Channel Islands and the Isle of Man.

Originally, to take part in the UK tax amnesty, people must have registered by 30 November and had until 12 March 2010 to send in full disclosures. It was not immediately make it clear whether the March date will also be adjusted to account for the move.

“This extension shows that HMRC is finally taking a common sense approach to making this amnesty work," said John Cassidy, tax investigations and dispute resolutions partner at PKF, the accountancy.

“Most of the banks that HMRC has approached for account holder details have yet to supply them – there could be another 150,000 individuals for HMRC to contact. This is vital because, my experience shows, that only a personal letter from HMRC really motivates people to come clean on tax inequalities – the more people they can write to before 4 January, the more money the amnesty will collect. We have had more enquiries about the NDO in the few days since the first batch of HMRC letters arrived than in the whole period since the NDO started on 1 September – with every individual mentioning a letter from HMRC." 

“HMRC has clearly learned from the experiences of the IRS. If this trend carries on, its next move will be an announcement in the Pre-Budget Report that all UK taxpayers will have to declare details of their offshore accounts when filing future tax returns – just like the FBAR rules in the US. This would stop individuals opening offshore accounts in future as it would be backed by swingeing penalties – perhaps as high as 70 per cent of the cash – for those who don’t report their accounts."
 
Another professional services firm also welcomed the news, but with a caveat.

"This is a highly significant move by HMRC and will be welcomed by those who are due to get letters from their banks in the next 5 weeks," said Andrew Watt, managing director of tax disputes and investigations at Alvarez & Marsal Taxand. 

"But the problem still remains for customers of the majority of the 308 banks on which notices were served but which not yet complied. These customers will not receive letters from their banks until long after the 4 January deadline. HMRC should extend the NDO notification deadline until all the banks have complied with the information notices."