Budget 2010: Liechtenstein still wins despite penalties
Offshore account holders could switch their funds to avoid 200% fines
Liechtenstein will be the undoubted winner as the government ramps up its
assault on tax evasion.
Under new powers to be introduced in April 2011, tax evaders that use
offshore facilities to hide income and gains from the taxman will face fines of
up to 200% of the tax due.
But under the Liechtenstein Disclosure Facility, penalties have been fixed at
10% of tax due, a rate that could encourage far more individuals to shift their
funds to the principality.
“You will definitely see more people opening a facility in Liechtenstein and
moving funds as it is now the only opportunity to reduce their exposure,” said
Ernst & Young’s tax investigation partner Chris Oates.
He added that as the disclosure facility will be available until March 2015,
“people have plenty of time”.
The move has demonstrated the government’s ongoing commitment to battling tax
evasion.
Cathy Corns, tax partner at Mercer & Hole, said: “The revenue is losing
patience – there have been three amnesties, including the Liechtenstein deal,
and so it now feels it has the right to hit tax evaders hard.”
Paul Harrison, KPMG’s UK head of tax investigation, said: “This marks a step
change in the landscape for those looking to evade or avoid tax through the
offshore route.”
But Oates questioned whether HM Revenue & Customs would have the
resources to enforce its new powers.
He said that HMRC would be very dependent on using its powers to gain
information, and that increased publicity, including high profile prosecutions,
would encourage others to declare offshore income
