Tax amnesty underway in Liechtenstein

29/07/2010

People with bank accounts in Liechtenstein are being warned to make sure they are fully tax compliant under UK law, as the tiny nation prepares to rein in its lenient tax allowances.

Thousands of UK taxpayers who have accounts in the Alpine nation will be receiving letters outlining what they must do in the next few weeks.

They will either have to demonstrate that they are UK tax compliant, or make a disclosure under the Liechtenstein Disclosure Facility (LDF) – the tax amnesty set up by HM Revenue & Customs (HMRC).

Jason Collins, a tax investigations expert at law firm McGrigors, said the move will weed out people with undeclared income in the country.

“These letters are likely to trigger a flood of disclosures from taxpayers with accounts in Liechtenstein who have been waiting to see if their Liechtenstein bank has identified them," he explained.

Uptake of the amnesty has been slow so far with just 175 of the 10,000 taxpayers who notified HMRC of their intention to make a disclosure under the now-defunct New Disclosure Opportunity amnesty, having made a disclosure under LDF.

But Collins said that failure to make disclosures under the LDF is likely to result in thousands of people having to pay much more in tax and penalties.