Liechtenstein » Tax Research UK

Making me feel nauseous

Code of Conduct, Ethics, Liechtenstein 6 Responses »

Sep 012009

My own profession can disgust me. Lawyers take the prize making nauseous though. Take this:

Opportunity for offshore account holders to slash the cost of using HMRC’s new “tax amnesty”

Qualifying UK taxpayers advised to open a Liechtenstein bank account before making a disclosure

More generous “tax amnesty” for offshore accounts opened locally rather than through UK branch or agency

Savings could run to hundreds of thousands, or even millions, of pounds per account holder

UK taxpayers planning to declare assets held in offshore bank accounts under HMRC’s latest “tax amnesty”, which begins on September 1, could slash the cost of making a disclosure by transferring assets into a Liechtenstein bank account first, says McGrigors, the leading commercial law firm and tax investigation specialists.

Phil Berwick, Director of Tax Investigations at McGrigors, comments: “HMRC is offering far more generous terms to UK taxpayers with Liechtenstein bank accounts than it is to those with offshore accounts in other jurisdictions. By opening a bank account in Liechtenstein and transferring funds there qualifying taxpayers will be able to take advantage of these more generous terms and substantially reduce their total liability.”

HMRC’s New Disclosure Opportunity (NDO) and Liechtenstein Disclosure Facility (LDF) will offer reduced penalties to individuals and businesses with undeclared income or gains held in offshore bank accounts or investments if they make a full disclosure.

Under the terms of both the NDO and the LDF taxpayers will be required to pay the tax due on income and gains on their unassessed tax liabilities (including those arising on shore), as well as interest and, in most cases, a fixed 10% penalty.

However, under the NDO, taxpayers will be required to disclose undeclared amounts going back 20 years, whilst under the LDF account holders will be required to come clean just for the last 10 years.

Now I know which firm I’d be giving a very hard time if they brought forward cases from Liechtenstein if I was an HMRC inspector.

Note to McGrigors: HMRC read this blog.

And this sort of abuse is precisely why we need much tougher regulation of those allowed to practice tax law in the UK.

Time to refer, once more to Association for Accountancy and Business Affairs’ and Tax Justice Network’s Code of Conduct.

Where are they now?

Banking, Corruption, Liechtenstein, Switzerland, USA Comments Off

Aug 232009

The USA has now charged four foreign nationals, three from Switzerland and one Liechtenstein with crimes related to tax evasion in the USA

Mario Staggl, a Liechtenstein citizen and resident who owns and operates a Liechtenstein trust company, New Haven Trust Co. Ltd.. He was indicted in 2008 with Bradley Birkenfeld for conspiring to defraud the United States by assisting Igor Olenicoff, an American billionaire, evade income taxes on approximately $200 million of assets hidden in Swiss and Liechtenstein bank accounts.

Raoul Weil, a UBS AG official, was indicted November 6, 2008, on a charge of conspiring to help 20,000 wealthy Americans hide assets from the Internal Revenue Service. He was declared a fugitive by a US judge in January 2009.

Hansruedi Schumacher, a former UBS banker, and Matthias Rickenbach, a Swiss lawyer with the firm Rickenbach and Partner, were indicted August 19, 2009, for conspiring to defraud the US government "in the collection of federal income. taxes."

So, what is the US doing to bring them to justice? Not a lot it seems. None of their names appear on Interpol’s list of individuals wanted by the US.

In that case what are Switzerland and Liechtenstein doing to help?

And where are they now? Does anyone know. And does the US Department of Justice really care?

Come on guys: it’s lawyers behind bars time; please get on with it.

Hartnett, tax evasion and where the UK goes next

HMRC, Liechtenstein, OECD 4 Responses »

Aug 222009

Forbes has published a profile of Dave Hartnett, the Permanent Secretary within the UK Civil Service responsible for HM Revenue & Customs. They say:

Dave Hartnett is taking strength from a baying crowd. As governments around the world call more loudly for a clampdown on tax evasion, [he] is doing all he can to stop wealthy Brits from hiding their money in tax havens. Having shifted to "Dave" from "David" a decade ago, his informality and aggressive persona may well have aided crucial negotiations to drive through the clampdown.

Hartnett, who led the team that brokered the deal, says it took 14 months of talks, some taking place in the home of the British ambassador to Switzerland, to gain the trust of Liechtenstein’s authorities. Now he expects to rake back 1 billion pounds ($1.7 billion) in lost tax revenues over the next five years as a result of the agreement.

As they note:

Hartnett, who became a tax inspector soon after graduating from Birmingham University with a degree in Latin, is known in the financial industry for his hard-line stance on tax evasion. "We want people to pay their fair share," he says. "Rather like most other countries we’ve got hospitals and schools to build, we’ve got welfare payments to make."

And they sought third party evidence:

"He’s the hardest tax negotiator the Revenue has ever had," said Richard Murphy of British consultancy Tax Research. "Don’t argue with him."

But so what? What’s next?:

Harnett hopes the Liechtenstein deal can be copied with other countries, and says his department would be prepared to help facilitate the discussions. "The U.K. wants to make a big contribution to tax compliance generally." Hard to argue with that.

True, but I do know that there are those in his department who are not, shall we say, wholly committed to the cause. Certainly any mention of Automatic Information Exchange goes down like a lead balloon with some at HM Treasury, where he is based. And that is not helpful right now because if the Liechtenstein deal proves anything it is that Dave Hartnett believes that Tax Information Exchange Agreements cannot deliver by themselves.

We’re looking for more from the UK at the OECD Mexico meeting as a result.

The Somalia Offshore Banking Scam Exposed

Corruption, Liechtenstein Comments Off

Aug 192009

PRIVACY ORIENTED | From the age of BIG BROTHER – greetings! ¬ª Blog Archive ¬ª The Somalia Offshore Banking Scam Exposed [UPDATED 3].

For all I know the exposure is also a fraud

But its good reading

What’s amazing was the address for the Somali finance centre was in …..Liechtenstein

Obvious, isn’t it?

Liechtenstein shows its true colours – and they’re not pretty

Liechtenstein, TIEA Comments Off

Aug 122009

Associated press were one of the many agencies I spoke to yesterday (some of whom have given no credit for the data supplied – such is life). The have a story that in one incarnation is here:

Liechtenstein’s agreement to help Britain recover taxes on wealth hidden away in the tiny Alpine principality by U.K. taxpayers is only the latest sign that traditional tax havens are yielding to governments hungry for extra revenue during the economic crisis.

"The agreement signed today is a very significant development," said Jeffrey Owens, tax policy director at the Organization for Economic Cooperation and Development. "It shows that the days of bank secrecy as a shield behind which evaders can hide is rapidly disappearing," Owens said.

Yet some experts see a flaw in most of the deals signed so far."The standard of proof that the inquiring country has to reach before it can submit an information request to a tax haven is so high, that they basically have to know all the information about which they’re asking," said Richard Murphy, director of British-based policy consultants Tax Research LLP.

"It is almost impossible for tax inspectors to create an audit trail connecting me to that bank account, unless I’ve been stupid or they strike very lucky," said Murphy.

He did – rather odd though that the simplified language used to explain how these things work – in which I played the role of abusive taxpayer – got into the article. But as they went on to note, I added:

Still, the accord between Liechtenstein and Britain breaks new ground.

Not so fast says Liechtenstein in response:

"The agreement is specific to the British tax system and can’t be used as a blueprint, but it could show the way for future accords of this kind," said Max Hohenberg, spokesman for the Liechtenstein government.

Well, I anticipated that:

Murphy, who campaigns for greater tax transparency, isn’t convinced the Liechtenstein deal is enough. "We are making progress, but we’re a long way from seeing a solution yet," he said. “Revenue services in several countries are already wising up to the fact that without some sort of active disclosure on the part of tax havens ‚Äî such as by automatically reporting the real owners of accounts and companies to their governments ‚Äî investigations will fail at the first hurdle. They know that behind the PR schmoozing there is a problem with this process."

He said some way has to be found to make available "smoking gun" evidence tying an individual to an offshore account.

But as the article notes:

Getting tax havens to agree to actively give up the names of their foreign clients is a step too far, even for Liechtenstein.

"At no point will we automatically provide information to other countries," said Hohenberg. "We’re trying to reach agreements that will block any moves toward automatic disclosure."

So, as I said, we still have a long way to go.

And Liechtenstein still has a lot to learn about coming in from the cold.

But they will learn it, eventually. They won’t have any choice.

The Financial Crimes: Liechtenstein: Trust me

Liechtenstein 12 Responses »

Aug 122009

The Financial Crimes: Liechtenstein: Trust me.

A Liechtenstein Trust is set up by a deed between the settlor and trustees. The trust deed does not have to name the beneficiaries. If the trust deed is deposited with the Liechtenstein Registrar of Trusts, it will not be publicly available, and later instruments, which might, for example, name beneficiaries, who might just happen to be Anglo Saxon, do not have to be disclosed. So if the trust is established with Liechtenstein trustees, there is no reason why the details of UK resident beneficiaries should show up in an audit.

For once I’m going to argue against the case presented here: know your client rules should disclose the UK link.

If they don’t we have a much bigger problem with Liechtenstein.

Of course that is possible: the new deal is predicated on there being real reform in Liechtenstein. If it really is a sham then the gains will be limited, money will leave without anti-money laundering suspiscious transaction reports beingn filed and cash recovery will be low.

But having toured the BBC yesterday talking about this issue I’ll confirm just exactly what I think: underlying this agreement is a weak Tax Information Exchange Agreement. Laid on top of it is the evidence that no one has confidence in Tax Information Exchange Agreements: the Proactiave Information Exchange Agreement as I have called it.

The PIE may not work. But sometimes you just have to try, and it’s better than just having a TIEA. Which is why I was trumpeting this as good news.

But I’ll be quite candid: I can be proved wrong.

UK / Liechtenstein moves us towards Proactive Information Exchange (PIE)

HMRC, Liechtenstein, Secrecy jurisdictions, Tax evasion, TIEA 1 Response »

Aug 112009

I’m not going to get over-excited, I hope, but I think the new UK / Liechtenstein Tax Information Exchange Agreement moves information exchange into a new era.

This deal is like no other Tax Information Exchange Agreement. Take this from the preamble:

The Government of the Principality of Liechtenstein and the Government of the United Kingdom of Great Britain and Northern Ireland (together “the Contracting Parties”) desiring to:

(a) regulate the exchange of information with respect to taxes between the Contracting Parties and facilitate tax cooperation and taxpayer assistance, and

(b) assist the maintenance and development of the Principality of Liechtenstein’s financial services industry,

have on this date reached an understanding covering various matters including the introduction by the Government of the Principality of Liechtenstein of a five-year taxpayer assistance and compliance programme and the introduction by the competent authority of the United Kingdom of a five-year special disclosure facility.

It is the Contracting Parties’ intention that by the conclusion of the five year period contemplated by the taxpayer assistance and compliance programme, there will be no beneficial owners who are liable to taxation within the jurisdiction of one Contracting Party who are using the laws of the other to disguise such liability without paying appropriate tax in the manner contemplated by the understanding.

Then look at the standard TIEA. You’ll see they are poles apart.

The standard TIEA is, to all intents and purposes, a passive document. The tax haven / secrecy jurisdiction signs it, sits back and waits for something to happen. In the case of the rush of them with the Faroe Islands I am sure nothing will ever happen. I suspect that may be true of others: the Belgian / San Marino one, for example.

But even if something happens the entire onus for action is on the requesting party, which will almost always be the major state. And only when they have surmounted the enormous impediments to action built into the standard TIEA will they actually have to respond to the request received, to which the answer can be ‚Äòsorry, can’t do’.

Not so in the case of the Liechtenstein deal: this deal requires action of Liechtenstein, action that will be audited. What is more, that action has a timescale attached to it and a performance criterion is set: there will be no UK tax evaders left in the place after five years.

This is something altogether new in information exchange: so new I’ll give it a name: Proactive Information Exchange (PIE), giving rise to Proactive Information Exchange Agreements (PIEAs).

Liechtenstein is now a party to ensuring tax compliance in the UK (as is the UK to ensuring tax compliance in Liechtenstein, I should add): and it’s not a passive party, but an active one. It has a duty to ensure that no one uses its secrecy to evade UK tax (and vice versa, which is not without problems for the UK – which is why I also welcome this deal).

I mentioned the OECD meeting planned for 1-2 September yesterday. This deal blows the agenda for that meeting apart in my opinion: Tax Information Exchange Agreements look crazy when something like a PIEA might be available.

Where now for information exchange?

Well, I stick by the need for Automatic Information Exchange (AIE), and the need for an agreement on what must be exchanged to make AIE work of the sort I have proposed. But all credit to the UK’s HM Revenue & Customs: we now have a new agenda of PIEAs into which AIE can fit – and that is very good news indeed.

Liechtenstein: the sort of deal we need

HMRC, Liechtenstein, Tax evasion, TIEA 4 Responses »

Aug 112009

The FT reports that HM Revenue & Customs has finally concluded a Tax Information Exchange Agreement with Liechtenstein, except it’s a deal like none before.

Negotiated personally by Dave Hartnett, Permanent Secretary of HM Revenue & Customs, and a man for who I have a high regard, this deal moves the goalposts on information exchange. As the FT notes:

About 5,000 British investors with an estimated £2bn to £3bn in secret Liechtenstein bank accounts will be asked to come clean under a ground-breaking deal to be signed on Tuesday.

The deal is unusual because Liechtenstein banks will be asked to close the accounts of customers who do not voluntarily disclose the existence of their accounts to HM Revenue & Customs and an audit will be undertaken to check that they have done so. This is the novelty of the deal: Liechtenstein is not just signing a Tax Information Exchange Agreement which it knows will have little impact. In this case it has to take action and rid the place of British tax evaders. that is completely new ground, and to be warmly welcomed.

The customers in the meantime get a generous variation on the current voluntary disclosure rules for overseas account holders wishing to declare past evasion.

As the FT again notes:

Although the Liechtenstein investors would in principle be free to move their money without telling the UK tax authority, they would risk triggering a disclosure under anti-money laundering rules.

and

The deal between Liechtenstein and the UK will accompany an agreement to exchange tax information on request. But by itself this would probably have a modest impact on tax evaders because the UK tax authority could request information only if it had good grounds for suspicion.

This shows that the awareness in the press of the criticism we are making of Tax Information Exchange Agreements is growing: they do not work by themselves. The UK has opened up a new front that has much to commend it.

But at the end of the day it is automatic information exchange that we need, and I’ll venture to suggest that the proposal I have made on how to achieve this is the most realistic on the table right now.

In the meantime – the funds this will produce have to welcome. On £2 – £3 billion over ten years or so expect £600 million or more in tax. That’s serious money recovered. It’s just a shame that an implicit guarantee of non-prosecution appears to have been given. But at least HM Revenue & Customs have the power to name those who settle now, which is very good news and should feed a useful media frenzy.

Don’t tell me large companies don’t tax evade

Corruption, G20, Liechtenstein, Tax evasion Comments Off

Apr 012009

From the Independent:

In a move that appeared to be timed to coincide with pressure by President Nicolas Sarkozy for a G20 agreement on curbs for offshore tax havens, the French government has demanded tax fraud investigations into bank accounts allegedly held in Liechtenstein by Michelin, Total and Adidas.

They were apparently on the Liechtenstein list.

They deny it all.

They always do.

But it doesn’t mean they don’t do it.

And it’s why tax havens must go. And why the G20 starting this process is so important.