Groundbreaking deal between HMRC and Liechtenstein
In a surprising move, HMRC have brokered a deal with Liechtenstein to address the banking secrecy rules that have made the Principality such an attractive place for investors over the years.
You may be aware, that currently a New Disclosure Opportunity to allow people with unpaid taxes linked to offshore accounts and assets on a worldwide basis is currently in progress.
The deal with Liechtenstein is rather different. Under the agreement, Liechtenstein will introduce a five-year taxpayer assistance and compliance programme and HMRC will introduce a five-year special disclosure facility.
This means that financial intermediaries in Liechtenstein will have to identify persons which it knows or has reason to believe may be liable to tax in the UK. The intermediary will then be under a duty to notify the person.
Unless the person provides evidence to the financial intermediary that they are not liable to UK taxation or they are compliant with their UK tax obligations in relation to their Liechtenstein affairs within the five-year period, the intermediary will then be required to stop providing services to them.
HMRC will make available a special disclosure facility to each person who notifies HMRC under the taxpayer assistance and compliance programme. Effectively, this facility will limit the recovery of UK taxes to a defined 10-year period and provide an option for a simplified composite rate of tax in certain circumstances. Normally, HMRC would be able to consider tax, interest and penalties for up to 20 years.
David Hartnett, Deputy Chief Executive of HMRC, gave an estimate of the kind of money he believes may be liable to UK tax
“We think the amount is somewhere in the region of £2-3 billion. It could be more; it’s unlikely to be less. And we expect to recoup around £1bn back into UK coffers over time.”
It just goes to show it’s an increasingly small world.
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