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Liechtenstein deal 'to net 1bn'

3 September 09 21:53 GMT

A breakthrough deal to recover lost tax from Britons holding bank accounts in Liechtenstein will net £1bn, Chancellor Alistair Darling has said.

HM Revenue & Customs struck an agreement last month with the Alpine tax haven to exchange information.

Up to 5,000 British investors are thought to have funds in secret accounts in the country - which would mean an average pay-back of £200,000.

The Revenue has requested details of 100,000 offshore accounts worldwide.

Tackling offshore evasion tax evasion and tax havens was "not only fair" but "particularly important... especially at a time when we expect public spending in the period ahead to be tighter", Mr Darling told the CBI Scotland annual dinner.

Pressure

Under the Liechtenstein arrangement, investors will be offered the chance to volunteer details of their deposits in return for penalties, capped at 10% of tax evaded over the past 10 years.

HMRC said that those who failed to make a full disclosure would have their accounts closed down and risked losing all their savings.

Liechtenstein was once seen as one of the most secretive jurisdictions, favoured by the wealthy looking to shelter money from their own tax authorities.

However, it came under pressure last year after the German government obtained a list of wealthy Germans with money invested there.

More generally, pressure has mounted on tax havens to share information since April's G20 Summit and similar deals have already been struck with the US and Germany.

Miscreants who confess will find the cash they have to hand over to HMRC will not be limited to just the penalty of 10%.

They will have to repay all the tax they should have paid in the first place, up to 10 years.

And they will also have to pay interest, which could turn out to be worth far more than the formal penalty charge.

Havens targeted

Governments are particularly keen to trace and recover unpaid revenues as tax receipts fall in the global recession.

In April, the UK government launched a second push to squeeze millions of pounds in unpaid tax from UK citizens with offshore accounts.

It has already signed agreements with tax havens such as Jersey, Guernsey, Isle of Man, and the British Virgin Islands to allow the exchange of financial information on UK residents.

The Revenue's first disclosure campaign in 2007 raised £450m from 45,000 people.

That targeted offshore accounts held by the customers of the UK's big High Street banks.

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