Two ground
breaking tax agreements between the Government of Liechtenstein
and the UK signed today will result in off shore investments in
Liechtenstein made by UK residents being properly taxed and
represent the commitment of Liechtenstein to increased tax
transparency.
A new Tax Information Exchange Agreement (TIEA) will enable the
UK and Liechtenstein to exchange information to ensure the right
tax is paid in each country in future.
A tax disclosure programme will clear up the tax arrears of UK
residents with investments in Liechtenstein and put things right
for the future. It will allow penalties on unpaid tax to be capped
at 10% of tax evaded over the last ten years providing the
taxpayer tells HM Revenue & Customs (HMRC) everything.
Those who fail to make a full disclosure by the end of the
programme will find their accounts in Liechtenstein closed down.
Together the TIEA and the disclosure programme provide a unique
structure designed to tackle past and future tax liabilities for
UK clients of Liechtenstein financial services.
Rt Hon Stephen Timms MP, Financial Secretary to the Treasury,
welcomed the agreements:
“Today’s agreements are very good news for honest taxpayers and
investors everywhere. And they represent a big step forward for
tax transparency.
I am grateful to the Government of Liechtenstein for their
goodwill, determination and professionalism to find an effective
way forward in a difficult and complex area.
HMRC and Liechtenstein Government officials have worked extremely
hard to arrive at these ground breaking agreements which mean that
investors can in future take advantage of the skills and
experience of Liechtenstein’s investment and banking services.”
Dave Hartnett, HMRC Permanent Secretary for Tax said:
“Those who have been evading UK tax on assets held in
Liechtenstein banks must now settle with us. There are no
alternatives.
To resolve this as quickly as possible we will cap penalties on
unpaid tax for those coming forward to make a full disclosure.
Those who make the mistake of ignoring the Liechtenstein
Disclosure Facility will have their accounts in Liechtenstein
closed and face penalties of up to 100% when HMRC catches up with
them.”
Notes to Editors
1. The Liechtenstein Disclosure Facility (LDF) runs from 1
September 2009 to 31 March 2015.
2. All Liechtenstein financial intermediaries will have to review
all clients identifying those who need to confirm their tax
position with HMRC and advise them to do so within a specific time frame.
3. Where a UK investor confirms to the intermediary that they are
cooperating with HMRC the financial intermediary can continue to
provide financial services to that person.
4. Where a UK investor cannot confirm that they are cooperating
with HMRC the financial intermediary must withdraw financial
services in Liechtenstein or apply various sanctions.
5. The Liechtenstein Government will introduce new laws to ensure
audit of the process.
6. To take part in the programme, investments must either be held
in Liechtenstein on 1 August 2009, in which case the person can
participate from the start of the facility on 1 September, or, if
the investments or assets are moved into Liechtenstein after that
date the person can participate from 1 December 2009, at the end
of the registration period for the New Disclosure Opportunity.
7. The penalty on unpaid tax will be limited to 10% in most cases
on the same basis as the New Disclosure Opportunity operated by
HMRC.
8. The recovery of earlier years’ tax lost will be restricted to
a maximum of 10 years up to 5 April 2009.
9. The taxpayer can elect to apply a special Composite Rate of
40% to cover all taxes on an annual basis without the benefit of
any relief or deduction.
10. Both HMRC and the Liechtenstein authorities expect that by
the end of the facility all UK taxpayers holding assets and
investments in Liechtenstein will be meeting all their UK tax
liabilities.
11. The TIEA was signed by the Rt Hon Stephen Timms MP, the
Financial Secretary to the Treasury, and Liechtenstein Prime
Minister, Dr. Klaus Tschütscher.
12. The text will in due course be laid as a Schedule to a draft
Order in Council for consideration by the House of Commons. It
will then also be available from the Stationery Office. The TIEA
will enter into force as soon as both governments have completed
the legislative procedures needed to give it effect.
13. The Memorandum of Understanding (MoU) setting out the details
of the Disclosure Programme was signed by Liechtenstein Prime
Minister, Dr. Klaus Tschütscher and Dave Hartnett CB, Permanent
Secretary for Tax in HMRC.
14. A joint Declaration was signed by HSH Ambassador Prince
Nikolaus von und zu Lichtenstein and Dave Hartnett CB, Permanent
Secretary for Tax in HMRC.
Full details of the disclosure facility and the text of the TIEA
are available from the HMRC website and on www.liechtenstein.li
Contacts:
Patrick O'Brien
Phone: 020 7147 2318
patrick.obrien@hmrc.gsi.gov.uk
Darlene Coker
Phone: 020 7147 2333
darlene.coker@hmrc.gsi.gov.uk
Andrew Bennett
Phone: 020 7147 0051
andrew.bennett3@hmrc.gsi.gov.uk
HMRC Out of Hours
Phone: 07860 359544
NDS.HMRC@coi.gsi.gov.uk