By Michael Millar
Date: Tuesday 12 Jun 2012
LONDON (ShareCast) - A clamp down on tax avoidance in Liechenstein could net the UK government three times the amount initially estimated.
The UK government, which is is targeting up to £3bn in total in tax revenues from subjects using the Principality to dodge the tax-man, said it had collected £296m so far under an arrangement between the two countries called the Liechtenstein Disclosure Facility (LDF).
It has also pencilled in £67m of payments made in LDF cases that have yet to be settled.
The scheme allows those who come forward to enjoy much lower fines than they would receive if they are caught using the Principality to avoid tax.
The government said the figures covered 1,399 of 2,400 taxpayers who have put applications into the facility.
It claims the rest of the £3bn is expected to come from the remaining 1,001 applicants, as well as others who are yet to come forward.
The LDF was started in September 2009 and was recently extended until April 2016.
The figures were released as the UK and Liechtenstein signed a double taxation agreement (DTA).
The DTA aims to remove obstacles to investment and other cross-border economic activity and give businesses increased certainty about their tax treatment.
The government is determined to clamp down on tax avoidance at home and abroad," said Exchequer Secretary, David Gauke.
"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," he added.
"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.
US authorities are also probing accounts in the Principality, having requested information on accounts at Liechtensteinische Landesbank that contained at least $500,000 at any time since the beginning of 2004.
Landesbank is one of 11 financial companies that are the target of a US tax evasion investigation.