Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Liechtenstein tax evasion crackdown gets underway

by
20th Jul 2010
Save content
Have you found this content useful? Use the button above to save it to your profile.

UK taxpayers with accounts in Liechtenstein will receive letters instructing them to settle their UK tax obligations or face having their accounts closed.

HMRC is to send letters to thousands of UK taxpayers with accounts in Liechtenstein. Taxpayers who have undeclared income in Liechtenstein based accounts are required to demonstrate they have complied with UK tax law, do not have a UK tax liability or to make a disclosure under the Liechtenstein Disclosure Facility (LDF).

The Liechtenstein government signed an agreement with HMRC in August 2009 setting out new rules which will come into effect in September this year. Under the new regulations, every bank account in Liechtenstein will be subject to a mandatory tax audit and those with outstanding UK liabilities will be offered the chance to volunteer details of their deposits, in return for penalties capped at 10% of the tax evaded over the last ten years.

The amnesty is not just limited to taxpayers with existing accounts or assets in Liechtenstein – those with bank accounts in other jurisdictions may also be eligible to use the LDF, providing the account was not opened through a UK branch or agency and they open an account in Liechtenstein and meet the qualifying criteria.

“However, the concern is that taxpayers with offshore accounts that aren’t in Liechtenstein won’t realise that they can also take advantage of this amnesty. Only Liechtenstein banks and trust companies must write to their customers, and there will be thousands of taxpayers with bank accounts in other jurisdictions who are eligible for the LDF but who won’t be aware of the amnesty,” warned Jason Collins, tax investigations partner at law firm McGrigors.

“Unless HMRC makes more of a splash, only a small minority of taxpayers who are eligible to use the LDF are likely to do so,” he added.

A spokesman for HMRC said: "Before the Liechtenstein agreement, many people had assumed that the use of tax havens to get around the law was a problem that could simply never be cracked.

"The enlightened approach taken by the Liechtenstein government has proven the cynics wrong."

Liechtenstein’s Prince Maximillian, who is also chief executive of the country’s biggest bank, the LGT Group, told The Sunday Telegraph: "For those who have wanted to use off-shore tax havens for tax evasion, the risks have dramatically increased. Forty years ago, the risks were low. With surveillance and intelligence, the risks are now very high.

"People from other countries, like Switzerland, are grasping the nettle and coming to take advantage of the Liechtenstein Disclosure Facility to come clean, too."

 

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.