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HMRC crackdown on offshore tax evaders

HMRC crackdown on offshore tax evaders

HMRC’s crack down on tax evasion with offshore accounts in Liechtenstein is gathering steam. The Revenue is sending letters to UK taxpayers who have accounts in the principality reminding them that they need to comply with UK tax law.

In August last year, the Liechtenstein government and HMRC signed an agreement that set out a new set of rules that come into force this September. Everyone with a bank account in the principality will have to undergo a mandatory tax audit and anyone who has outstanding UK tax liabilities will have the opportunity to volunteer details of their deposits and just receive a 10% penalty for the tax they have evaded in the last decade.

However, this deal is not only for people with assets or accounts in Liechtenstein. UK taxpayers with bank accounts in other countries may also take advantage of the Liechtenstein Disclosure Facility as long as they meet the qualifying criteria and open a bank account in the principality.

There are concerns that taxpayers who have offshore accounts that are not in Liechtenstein will not appreciate that they can also take advantage of this tax amnesty. A tax investigations partner from the law firm McGrigors said that it is only banks and trust companies in Liechtenstein that are obliged to contact their customers and therefore the thousands of taxpayers who hold business bank accounts in other countries will not be aware of this tax amnesty.

The LDF runs until March 2015 and taxpayers who fail to make a disclosure are likely to have to pay a lot more tax and resulting penalties. They also face having their bank accounts closed.

Prince Maximillian, the Crown Prince of Liechtenstein, said that this new arrangement means the risk of using offshore bank accounts as a tax haven is now extremely high.

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Image: detective by olarte.ollie

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