HM Revenue & Customs
(HMRC)
today agreed to begin a mutual exchange of knowledge with Liechtenstein, in order to end its status as a tax haven.
Britons with concealed accounts in the Alpine principality will first be given the opportunity to disclose specific and detailed information about their deposits. If they do so they will receive more lenient penalties and have a reduced risk of prosecution.
Penalties on unpaid tax will be capped at 10% of tax evaded over the last 10 years, if the account holder provides HMRC with full disclosure. All those who do not voluntarily come forward with these details will have their accounts closed down by the authorities in Liechtenstein.
There is an estimated £3 billion stored in covert accounts in the country, belonging to up to 5,000 British investors. The deal gives them five years starting from 2010 to declare their assets in the country.
The move from the British Government has come in the wake of details of hundreds of investors from abroad having been sold to tax authorities in Germany, by a banker from LGT – Liechtenstein’s largest bank.
As a result of this whistle blowing, it surfaced that both LGT’s Chief Executive and the ruler of the country Prince Alois’ brother were under investigation – Liechtenstein’s royal family owns the bank.
Germany and the USA have already put together similar deals with Liechtenstein, and Switzerland has also recently come to a legal settlement with the USA, over disclosing the details of accounts of US citizens.
Liechtenstein is the latest country in a recent line to have signed such a deal with HMRC, following similar agreements from Britain with Bermuda, the Isle of Man, Guernsey and the British Virgin Islands.
This settlement with Liechtenstein stands out because it is the first such deal to be struck with a country outside Britain’s direct influence.
The Revenue’s first disclosure campaign in 2007 raised £450m from 45,000 people; that targeted offshore accounts held by the customers of the UK’s big High Street banks.
