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UK signs Liechtenstein tax deal | UK signs Liechtenstein tax deal |
(about 1 hour later) | |
The UK has signed a breakthrough deal to recover lost tax from Britons holding bank accounts in Liechtenstein. | The UK has signed a breakthrough 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 are thought to have an estimated £3bn 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 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. | 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. |
HMRC said that those who failed to make a full disclosure would have their accounts closed down and risk losing all their savings. | HMRC said that those who failed to make a full disclosure would have their accounts closed down and risk losing all their savings. |
"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. | "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. |
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". | 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". |
Pressure | 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. | Liechtenstein was once seen as one of the most secretive jurisdictions, favoured by the wealthy looking to shelter money from their own tax authorities. |
ANALYSIS Mark Sanders, BBC News, Vaduz After he signed the agreement with Liechtenstein, Treasury minister Stephen Timms acknowledged that such a deal would have been "pretty unimaginable" a year or two ago. | |
The British government hopes that within five years, no accounts in Liechtenstein will be hidden from HM Revenue and Customs. | |
Liechtenstein has agreed to close the accounts of British investors who will not disclose financial information to the UK tax authorities. | |
The deal goes beyond what the Alpine principality has already agreed with the US and Germany. | |
With tax revenues falling because of the recession, governments around the world are eager to track down and recover revenue that should have been paid to them in tax. | |
However, it came under pressure last year after the German government obtained a list of wealthy Germans with money stashed away. | 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. | 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. |
"People with money hidden in Liechtenstein should come clean now," said Chas Roy-Chowdhury of the ACCA accountancy body. | "People with money hidden in Liechtenstein should come clean now," said Chas Roy-Chowdhury of the ACCA accountancy body. |
"This is their last and best chance; the world is going to get tougher for them, and they are going to be caught out," he warned. | "This is their last and best chance; the world is going to get tougher for them, and they are going to be caught out," he warned. |
Miscreants who confess will find the cash they have to hand over to HMRC will not be limited to just the penalty of 10%. | Miscreants who confess will find the cash they have to hand over to HMRC will not be limited to just the penalty of 10%. |
They will have to repay all the tax they should have paid in the first place, up to 10 years. | They will have to repay all the tax they should have paid in the first place, up to 10 years. |
And they will also have to pay interest, which could turn out to be worth far more than the formal penalty charge. | And they will also have to pay interest, which could turn out to be worth far more than the formal penalty charge. |
Squeeze | Squeeze |
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 second push to squeeze millions of pounds in unpaid tax from UK citizens with offshore accounts. | In April, the UK government launched a second push to squeeze millions of pounds in unpaid tax from UK citizens 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. | 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 disclosure campaign in 2007 raised £450m from 45,000 people. | 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. | That targeted offshore accounts held by the customers of the UK's big High Street banks. |
"Tax havens are being squeezed by the larger economies such as the USA and the UK," said Mr Chowdhury of the ACCA. | "Tax havens are being squeezed by the larger economies such as the USA and the UK," said Mr Chowdhury of the ACCA. |