Liechtenstein loophole may undercut UK tax amnesty

The taxman seems to have shot himself in the foot over the amnesty for savers to disclose cash in offshore accounts that they should have paid tax on.

Savers who ignored the taxman’s amnesty of offshore investment in 2007 have a second chance to disclose details of their investments and to bring their tax affairs up to date 1 September and will run until 12 March 2010.

For a limited period, investors can benefit from the favourable penalty terms offered, but this offer is undercut by a second amnesty with reduced penalties for investors with cash in Liechtenstein.

For offshore investors with money stashed away anywhere other than Liechtenstein, they must make a full disclosure of all undeclared liabilities, not just those connected with an offshore account or asset.

Tax

This means the taxman will agree to:

• A fixed penalty of 10% of the taxes/duties underpaid.
• No penalty where the total of unpaid taxes or duties is less than £1,000.
• A fixed penalty of 20% must be paid by anyone who HMRC wrote to about the availability of the Offshore Disclosure Facility in 2007, either to tell them that they had their account details or to remind them to disclose after they had notified.

Anyone who meets the above criteria may have a chance to cut their 20% fixed penalty by half if they transfer their offshore funds to Liechtenstein and then make their declaration.

The UK government recently signed an agreement with financial authorities in Liechtenstein that will result in the grand duchy handing over details of an expected 100,000 previously secret bank accounts to HM Revenue and Customs.

From 1 September 2009 until 31 March 2015, UK taxpayers with undeclared investments in Liechtenstein can volunteer to put their past and future tax affairs on the right footing.

The Liechtenstein agreement allows them special terms:

• 10% fixed penalty on the underpaid liabilities with full interest paid
• No penalty where an innocent error has been made
• Assessment period limited to accounting periods/tax years commencing on or after 1 April 1999
• The option to choose a single composite rate of 40% or to calculate actual liability on an annual basis
• Assurance about criminal prosecution

Whatever your financial goals or aims, seeking professional highly regulated advice as early as possible from Qrops Adviser, is the first step in securing the best possible life in retirement. Contact us via the contact Qrops Adviser page, call us direct on 0032 (0)2 400 0087 or email us at info@qropsadviser.com.