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UK and Liechtenstein in tax deal UK signs Liechtenstein tax deal
(about 5 hours later)
The UK is expected to sign a deal to recover lost tax from Britons holding bank accounts in Liechtenstein. The UK has signed a deal to recover lost tax from Britons holding bank accounts in Liechtenstein.
HM Revenue & Customs (HMRC) has agreed with the Alpine tax haven to start exchanging information.HM Revenue & Customs (HMRC) has agreed with the Alpine tax haven to start exchanging information.
Up to 5,000 British investors have an estimated £3bn stashed away in secret accounts in the country. Up to 5,000 British investors are thought to have an estimated £3bn in secret accounts in the country.
Investors are expected to be offered the chance to volunteer details of their deposits in return for limited penalties and low risk of prosecution. Investors will be offered the chance to volunteer details of their deposits in return for penalties, capped at 10% of tax evaded over the past 10 years.
More details of the deal with Liechtenstein's royal family and its government will be announced later on Tuesday. HMRC said that those who failed to make a full disclosure would have their accounts closed down and risk losing all their savings.
Pressure has mounted on tax havens to share information since April's G20 Summit and similar deals have already been struck with the US and Germany. "Those who have been evading UK tax on assets held in Liechtenstein banks must now settle with us. There are no alternatives," said HMRC permanent secretary for tax, Dave Hartnett.
The small principality between Switzerland and Austria is renowned for the secrecy that shrouds the financial affairs of rich investors. Treasury minister Stephen Timms added that the agreement was "very good news for honest taxpayers and investors everywhere", saying it represented "a big step forward for tax transparency".
It was once considered to be among the most secretive jurisdictions in the world. Pressure
Liechtenstein was once seen as one of the most secretive jurisdictions, favoured by the wealthy looking to shelter money from their own tax authorities.
However, it came under pressure last year after the German government obtained a list of wealthy Germans with money stashed away.
More generally, pressure has mounted on tax havens to share information since April's G20 Summit and similar deals have already been struck with the US and Germany.
Governments are particularly keen to trace and recover unpaid revenues as tax receipts fall in the global recession.Governments are particularly keen to trace and recover unpaid revenues as tax receipts fall in the global recession.
In April, the UK government launched a new push to squeeze millions of pounds in unpaid tax from people with offshore accounts.
It has already signed agreements with tax havens such as Jersey, Guernsey, Isle of Man, and the British Virgin Islands to allow the exchange of financial information on UK residents.
The Revenue's first campaign in 2007 raised £450m from 45,000 people. That targeted offshore accounts held by the UK's big High Street banks.