HM Revenue and Customs
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UK and Liechtenstein update tax deal
More than 2,400 people have registered to disclose unpaid tax under the Liechtenstein Disclosure Facility (LDF) with £363 million already paid in tax bills, HM Revenue and Customs (HMRC) announced today.
The LDF is now expected to bring in up to £3 billion by 2016
based on the current numbers of disclosures.
The figures were released as the United Kingdom and the Principality of Liechtenstein prepared to sign a double taxation agreement (DTA) today. The DTA will remove obstacles to investment and other cross-border economic activity and will give businesses increased certainty about their tax treatment.
The agreement, the first between the two countries, will be signed in London by Dr Klaus Tschütscher, Prime Minister of the Principality of Liechtenstein, and David Gauke MP, Exchequer Secretary to the Treasury.
At the same time, the UK and the Principality of Liechtenstein will sign a third Joint Declaration on the Memorandum of Understanding (MOU) on cooperation in tax matters. This further clarifies the Liechtenstein Disclosure Facility [HMRC] and the Taxpayer Assistance and Compliance Programme [Liechtenstein] arrangements between the parties. It makes available a Single Charge Rate of 50 per cent that Liechtenstein investors might apply to calculate undisclosed UK tax liabilities for the tax year 2010/11. The MOU will be signed by Dr Tschütscher and Dave Hartnett, Permanent Secretary for Tax in HMRC.
The Exchequer Secretary, David Gauke, said:
“The Government is determined to clamp down on tax avoidance at home and abroad. The UK has the largest tax treaty network in the world but, until now, Liechtenstein was the only country in the European Economic Area we had no agreement with. This new treaty and the existing disclosure facility show that the net is closing on those who try to evade their UK tax liabilities by using offshore structures - there are fewer and fewer places to hide.”
Dave Hartnett, Permanent Secretary for Tax at HMRC, said:
“The third Joint Declaration recognises the overwhelming success of the LDF. HMRC originally estimated the number of people who would register for the disclosure facility at 2,000, and that it would probably produce £1 billion. In light of the ongoing success of the LDF we now anticipate the arrangements will produce up to £3 billion from a much larger number of people.”
Notes to Editors 1. The Liechtenstein Disclosure Facility (LDF) was signed in August 2009 and was originally scheduled to run from 1 September 2009 to 31 March 2015. It has since been extended to 5 April 2016. The yield of £363 million is made up of £296 million generated from settled cases and £67 million paid in cases not yet settled.
2. The agreement allows investors in Liechtenstein who are liable to UK tax to legitimise their tax affairs for the past and ensure they are tax-compliant for the future. It is underpinned by a tax information exchange agreement, signed in August 2009, and by special legislation in Liechtenstein.
3. By the end of the facility it is expected that all UK taxpayers holding assets and investments in Liechtenstein will be fully compliant with their obligations under UK tax law.
4. Parliament is expected to ratify the agreement this year, so it can take effect from 1 January 2013.
5. Follow HMRC on Twitter @HMRCgovuk.
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