The Liechtenstein Government intends to sign up to the Organisation for Economic Co-operation & Development (OECD) for greater standards of transparency and exchange of information. This is a move welcomed by HMRC who have spent many years negotiating with colleagues in the OECD and more recently with the UK embassy in Berne and the Liechtenstein Government.
The Right Honourable Stephen Timms MP, Financial Secretary to the Treasury said:
"Today's welcome announcement is further evidence that tax secrecy is fast becoming entirely unacceptable. We now need to see Liechtenstein move quickly to take the concrete steps which need to follow. In the next few weeks we will be accelerating the internationally co-ordinated drive for improved openness and transparency."
Dave Hartnett, HMRC Permanent Secretary for Tax said:
"Whilst today's commitment is to be welcomed, we need to see a quick application of the OECD standards on transparency, including to previous years. Today's recognition of the need for transparency does not mean we can draw a line under many earlier years of secrecy. HMRC looks forward to taking these matters forward with the Government and banks of Liechtenstein in the near future."
It is estimated that around 300 wealthy Britons held secret bank accounts in the tax haven of Liechtenstein with assets worth around £1bn ($2bn, €1.26bn). These clients are now are facing investigation and possible prosecution by the UK tax authorities. Inquiries are expected to take two or three years.
The Liechtenstein tax evasion scandal broke in February 2008 after a former employee of LGT, the bank controlled by the principality’s ruling family, sold internal bank details to several tax authorities. Since this time, further details have emerged allowing the various tax authorities to begin investigations. One US report concluded that US taxpayers had evaded an estimated $100bn of taxes each year.
Investigators have focused on around 15,000 LGT clients with total funds of £100-110bn invested through 4,000 foundations and other entities designed to provide anonymity. Approximately 50 countries believe their citizens have undisclosed assets in LGT and as a result of revelations, foreign tax authorities are increasing pressure on Liechtenstein’s 15 other banks to co-operate.
After receiving information, Germany launched the biggest tax evasion inquiry in its history. Subsequently, many suspected tax evaders have now been contacted by the German Tax authorities. It has been reported that some are now considering suing their Liechtenstein bank for failing to inform them promptly of the theft which happened in 2002. They claim that had they known, they may have been able to take advantage of the former tax amnesty in 2004.
