Liechtenstein facility criteria changed

Britons who want to use the Liechtenstein Disclosure Facility (LDF) to settle tax liabilities on favourable terms will have to pay more money into a bank account in the tiny European principality and keep the account open for longer, reports Nick Huber.

Previously, there was no minimum amount for opening a bank account in Liechtenstein to qualify for the disclosure facility that allows Britons who come clean about money owed to pay a 10% penalty on undeclared tax liabilities - significantly lower than normal penalties.

But according to Smith & Williamson the rules for using the scheme have just been made tougher.

From 1 December, Britons who want to use the LDF will need to have a “meaningful connection” with Liechtenstein, Smith & Williamson says in a tax briefing. Details have yet to be finalised, but the new rules are likely to mean that Britons will need to pay at least £50,000 into their Liechtenstein bank account and keep it open for longer, said Sue Holmes, head of national tax investigations at Smith & Williamson.

Continued...

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Comments
carnmores's picture

LDF

carnmores | | Permalink

this is most wonderful wheeze for those who have undeclared and never been anywhere near Lichtenstein

anti avoidance civil servants!    1 thanks

david5541 | | Permalink

this a sign anti avoidance civil servants gone mad! 

it wont take long before phillip green, boris beresovsky, romano bromovich and all others who bank roll the uk sports sector and avoid paryoll taxes other wise find another wheese to jump ship and erode the uk tax base yet again with this sort of thing going on.....

carnmores's picture

THIS IS NOTHING TO DO WITH AVOIDANCE

carnmores | | Permalink

but with evasion and it is a great deal for such persons - penalty limited to 10% - timescale may only go back to 1999 - composite rate of tax vaialable etc

you commenst about bankrolling the sports sector are way off too

frustratedwithhmrc's picture

The LDF was always going to be a bad compromise

frustratedwithhmrc | | Permalink

Given the circumstances in which the LDF arose, essentially the sale of bank customer details by a bank employee to the German Intelligence Services, this was never going to end well.

The LDF was a bad compromise from the beginning as the Liechtenstein government and its domiciled banks felt that they were being blackmailed by foreign governments and the OECD using deliberately stolen information into breaking their countries stringent banking secrecy laws. Regardless of the government of Liechtenstein having to sign an agreement at the point of a gun, the UK authorities should never have allowed it to be as open as it was.

The difficulty that we have now is that those who have undertaken CRIMINAL TAX EVASION can essentially use the LDF to get away with it. Not only that, but tax evasion that has been going on elsewhere in the world can be legitimized through the LDF.

The changes being made effective of 1st December 2011 is a matter of shutting the door after the horse has bolted.

I accept that periodic tax amnesties for overseas income may be appropriate given the dire public finances at the present time, but it's incarnation in the LDF is entirely inappropriate.

Those being found on the stolen discs should have been prosecuted (not sure if this would stand up in court) or at the very least subject to a full tax investigation and severe (i.e. 70% minimum) interest and penalties. Any amnesty should have followed these prosecutions and been equally intensive albeit with some redemption for those coming forward without being called.

However, even this should have been restricted to those institutions domiciled in Liechtenstein and only up to the date of the announcement, otherwise you get exactly the mockery of good, decent, honest taxpayers that you have at the moment.

I often wonder how many MP's, Lords and other politically connected persons were on the disks that the Germans obtained...

carnmores's picture

yes Frustrated that makes sense but there is another point

carnmores | | Permalink

and that is those tax payers who have made incorrecrt returns and never previously ever been near Lichtenstein (or their banks)  can take advantage of the facility by opening a L bank account - presumably that was the quid pro quo for the illicit means by which some info was obtained - HMRC will get everybody to open an account in L!

carnmores's picture

frustrated can you help me as i have re read your post

carnmores | | Permalink

you state

 

However, even this should have been restricted to those institutions domiciled in Liechtenstein and only up to the date of the announcement, otherwise you get exactly the mockery of good, decent, honest taxpayers that you have at the moment.

 

can you expand please i dont understand excuse my ignorance

frustratedwithhmrc's picture

Let me attempt to clarify the issue.

frustratedwithhmrc | | Permalink

frustratedwithhmrc wrote:

However, even this should have been restricted to those institutions domiciled in Liechtenstein and only up to the date of the announcement, otherwise you get exactly the mockery of good, decent, honest taxpayers that you have at the moment.

The stated purpose of the LDF was 'allegedly' to deal with issues arising from the fallout of the theft of Liechtenstein Bank data supposedly allowing those UK residents who were banking in Liechtenstein without making full disclosures of these holdings to come clean and resolve their affairs with only minimal penalties.

If the terms of the LDF, which were essentially an amnesty was specifically to deal with the issue above, then by restricting it to only those UK residents having undisclosed accounts in Liechtenstein prior to the announcement, then this would stop any Thomas, Richard and Harriet from coming along at a later date, transferring their untaxed money into a Liechtenstein bank account and then effectively getting an amnesty (in essence tax laundering, if not money laundering) even though their evasion had taken place outside Liechtenstein.

Many advisors (including some on Accounting Web) have mentioned this as a strategy for resolving issues of undisclosed tax evasion.

I hope that clarifies the issue. 

carnmores's picture

ok

carnmores | | Permalink

did you mean those people who had accounts in the hacked banks - rather than the domiciled institutions as stated

frustratedwithhmrc's picture

I have no problem with doing a deal with Liechtenstein per se...

frustratedwithhmrc | | Permalink

The 'hacked bank' was LGT, owned by the ruling family of Liechtenstein.

However, there are a further 12 banks formally domiciled there and I have no problem with the UK government doing a deal with the government of Liechtenstein which covers all of the banks, not just LGT.

Where I do have a problem, is that someone who has been doing their fiddling somewhere else can effectively open up a Liechtenstein bank account, drop their funds into that, declare the monies under the terms of the LDF and get away virtually free.

Even under the revised rules, the LDF will be open until 2015 allowing all manner of non-Liechtenstein associated tax evasion to be brushed under the carpet for a nominal fee to HMRC.

This makes me angry.

 

carnmores's picture

ta

carnmores | | Permalink

i get it - it is extraordinarily generous - i suppose if it had not been there would have not been much of an incentive for evaders to come forward - whoever they may have been.......

It is a disgrace

The Black Knight | | Permalink

They should have arrested a few and locked them up......then continued.......until the tax take rose...................there must be some high profiles that need this facility to get their house in order me thinks.

Why is 10% only available to the wealthy ? They surely can afford a better class of penalty !!

frustratedwithhmrc's picture

I might be being cynical here but...

frustratedwithhmrc | | Permalink

The Black Knight wrote:

They should have arrested a few and locked them up......then continued.......until the tax take rose...................there must be some high profiles that need this facility to get their house in order me thinks.

Why is 10% only available to the wealthy ? They surely can afford a better class of penalty !!

Three obvious thoughts pop-up here:

  • Given the way the data was obtained (theft from the bank by an employee), I very much doubt that it would be allowed in court.
  • Any court case would have to present the file as evidence, which would enter it into the public record, this would mean that people who are being hidden or protected (MP's, MEP's, politically connected persons, etc.) would be revealed
  • The German Security Services may have provided (or perhaps even sold) the information to HMRC on the basis of it not being published, only used as part of a tax investigation.

Equally, the 10% might have been the price from Liechenstein for cooperating, the alternative being the entire destruction of their financial services industry upon which the principality is totally dependent. 

frustratedwithhmrc's picture

Removed - Duplicate Post

frustratedwithhmrc | | Permalink

Removed - Duplicate Post

simples

The Black Knight | | Permalink

lock up the thief that stole the data too....and the fence.....and the receiver............we either have rules or we don't ??

frustratedwithhmrc's picture

Under Witness Protection

frustratedwithhmrc | | Permalink

The Black Knight wrote:

lock up the thief that stole the data too....and the fence.....and the receiver............we either have rules or we don't ??

I am sure that the authorities in Liechenstein would love to lock up the thief (whose name is Heinrich Kieber), however as well as paying him  5 million Euros, the German authorities have also provided him with protection under their witness protection programme. He is currently believed to be living "the good life" in Australia.

http://www.theaustralian.com.au/news/tax-fraud-informer-on-run-in-australia/story-e6frg6to-1111115744266

Equally, the receivers of these 'stolen goods', both the German authorities and HMRC enjoy immunity from prosecution for being involved in the purchase of these stolen materials.

LOL

The Black Knight | | Permalink

I am sure they could afford to buy someone the the German witness protection department now that this is acceptable behaviour.............not too sure whose got the contract for extraordinary rendition these days now Gadaffi has gone......but I am sure for a fee the yanks would yank him from his place of safety...no trial needed !

Once upon a time governments used to be discrete about these things now they really don't care.