TaxPersonal TaxHistoric Liechtenstein tax deal branded ‘unfair’

Historic Liechtenstein tax deal branded 'unfair'

Tax information exchange deal struck, but advisers brand the easier terms 'unfair' when compared with upcoming New Disclosure Opportunity

The Liechtenstein landscape

UK residents holding bank accounts in Liechtenstein will have their details
shared with the British government to make sure they have paid the right tax, in
a groundbreaking deal signed today.

The new tax information exchange agreement will enable the UK and
Liechtenstein to swap information to ensure the right tax is paid in each
country.

A tax disclosure programme will allow penalties on unpaid tax to be capped at
10% of tax evaded over the last ten years, providing the taxpayer is fully open
with the taxman.

PKF broadly welcomed the new tax amnesty but warned the difference in terms
to the
New
Disclosure Opportunity
were ‘unfair’.

‘The Liechtenstein tax deal offers account holders the opportunity to settle
any unpaid tax with only a 10% penalty and going back only as far as 10 years.
In contrast, the NDO set to begin in September this year, is asking UK taxpayers
with investments in other offshore jurisdictions to declare unpaid tax as far
back as 20 years. In some cases they may also have to pay a 20% rather than a
10% penalty.

John Cassidy, tax investigations partner at PKF, said: ‘It is wholly unfair
that there are different rules for those with investments in Liechtenstein and
those with investments in other offshore jurisdictions.’

Christian Aid, the charity organisation also slammed the taxman after
estimating developing countries lose at least $160bn (£97.1bn) a year to ‘tax
dodging’ by multinational companies alone.

‘The fact that the UK has signed two agreements today – a TIEA and a second
one, ensuring that uncooperative UK taxpayers have their Liechtenstein accounts
shut down – is a clear sign that TIEAs are almost impossible to use,’ said
Christian Aid policy manager Alex Cobham.

‘They are extraordinarily bureaucratic and riddled with get-out clauses,’
Cobham claimed in a statement. ‘If TIEAs were an effective way for tax
authorities to combat tax dodging, then there would have been no need for the
second agreement.’

HMRC has vowed that those who fail to make full disclosures will have their
Liechtenstein accounts closed down.

‘Those who have been evading UK tax on assets held in Liechtenstein banks
must now settle with us. There are no alternatives,’
HMRC
permanent secretary for tax Dave
Hartnett
said.

The Liechtenstein Disclosure Facility runs from 1 September 2009 to 31 March
2015.

Further reading:

Tax
amnesty branded ‘unfair playing field’

HMRC plans separate Liechtenstein
amnesty

Liechtenstein eases bank secrecy
rules

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