Liechtenstein is the latest target of HMRC crackdown
HMRC’s crackdown on tax evasion continues to reach out into popular tax havens. The drive began dramatically in 2006 with an unprecedentedly large disclosure order being served on the offshore arm of British high street bank Barclays. The resulting investigations are eventually expected to yield up to £1.5bn. HMRC hailed the granting of this order by the Special Commissioner as a landmark ruling and have been proved correct, with orders against other banks following on.
In April 2007, HMRC announced an amnesty for taxpayers with offshore arrangements – full disclosure and co-operation would result in more lenient treatment and reduced penalties. Over 60,000 taxpayers registered for the amnesty scheme initially, and many of them then made disclosures which raised around £400m, but as of today around 20,000 of those who registered have still not made a disclosure. HMRC is understood to favour a hard line against these reluctant taxpayers, with the outgoing Chair suggesting in an interview with the Sunday Times that they should face prison sentences, and should not be eligible for this year’s similar amnesty arrangements.
The current phase of the crackdown suggests a slight shift of focus on the part of the investigators, from institutions with multiple offshore interests, to specific tax havens. Last July, Guernsey-based taxpayers found that a number of well-known high street banks had disclosed their details to HMRC. This year, the focus is on Liechtenstein, where HMRC believes up to £2bn in taxable assets and income has been concealed by as few as 300 individual Britons. This investigation is based on information supplied (for a reward) by a former employee of Liechtenstein-based LGT bank, and orders against another 15 Liechtenstein banks are currently being sought. The Liechtenstein investigation is expected to take anything up to four years, but concurrent investigations can apparently be expected in the Channel Islands, the Virgin Islands, Panama and Monaco.
As ever, early disclosure and full co-operation is agreed to be the best policy among all major tax accounting firms and leading industry figures.