Offshore tax evasion crackdown expected to raise £10bn…

Yesterday’s Guardian reports on Osbourne’s negotiations with Liechtenstein, Switzerland and a further 3 unidentified tax havens. The Treasury appear confident of raising £10bn over the next 5 years:

The Treasury had only budgeted to raise £1bn across the parliament, mainly from an agreement with Liechtenstein. But George Osborne, the chancellor, is now expecting to raise £2bn to £3bn from secret bank accounts in the mini-state alone.
Officials said a further £3bn was expected to be raised from Swiss bank accounts after an agreement with tax authorities there, signed 10 days ago, to push forward on a deal. There is thought to be up to £125bn stashed away in Swiss bank accounts by British citizens.
The Treasury said three further tax havens had asked to open negotiations on information disclosure, the method by which Revenue & Customs is locating billions the British super-rich have salted away and then taxing accounts and demanding back payment of unpaid tax.

It’s that “£125bn stashed away in Swiss bank accounts” that is astonishing. A couple of questions to those with more knowledge of multi million pounds tax avoidance than me:
1) Is there a criminal legal redress?
2) How can the Cayman islands have a different tax regime to the UK? Doesn’t that contravene the Azores case? Or is that just confined to Eurpoean territories?

Here’s the Tax Journal’s take on the Liechtenstein agreement:

Liechtenstein is clearly concerned that its banks are being used to provide short term assets for the LDF(Liechtenstein Disclosure Facility-Dewi) and this declaration points towards some hardening in what qualifies and what does not, which is helpful,’ said Gary Ashford, RSM Tenon’s Head of Tax Risk.
Experts have observed that the LDF is the most favourable ‘amnesty’ yet announced by HMRC. Writing in Tax Journal (20 September), Richard Clarke and Hannah Foulkes of PwC said the MOU ‘allows people to qualify for the facility by opening a bank account or moving an existing structure/asset into Liechtenstein after the facility had been launched and up to its closure in March 2015’.
They added: ‘The main benefits are that under [the terms of the LDF] HMRC will only go back ten tax years instead of the statutory maximum 20 year period and that it allows individuals with undisclosed UK liabilities to access the favourable terms of the LDF by simply opening an account in Liechtenstein, thus for the first time bringing domestic evasion into such an initiative.’

er -“thus for the first time bringing domestic evasion into such an initiative” What???

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  • Aldamir

    Chasing tax dodgers is a bit like “efficiency savings”. People with little understanding of the workings of the financial world believe that both will raise or save vast sums of money for the public coffers. In reality £10 billion over 5 years is a tiny amount of money.

  • Alan Maskey

    What is the view of Her Majesty’s government on the tax fiddle havens of the Isle of Man, the Channel IIslands and lots of other pinpricks that will forever be England?

    Aldamir: You are right. £10 bn would hardly pay for a round of drinks.

  • Kevin Barry

    She seems to be fine with it especially as she signed double tax treaties with them (Jersey and Guernsey) thus allowing, in my experience, companies to pay in effect 2% tax.

  • Jimmy

    The Caymans aren’t covered by the Azores case because they’re not in the EU. The “pinpricks” all have either withholding tax or information exchange agreements in relation to EU account holders. Which is why the money’s all in Switzerland now.

  • Kevin Barry

    In answer to your questions Dewi, and Jimmy has beaten me to it for 1

    i) Very little redress if any, you can have your money where you like, so long as the money in question has been disclosed to HMRC. Even if it hasn’t, if HMRC finds out about it you could just settle with them like Vodafone. They don’t have the time, money or personnel to find all of this out and they are up against some very craft people.

    ii) Cayman, along with the BVI and Bermuda, is a British Overseas Territory; it does not form a part of the UK though it falls under the jurisdiction of the UK.

    I’d be surprised if HMRC sees any of the money mentioned above. If they want to close these loopholes it would be mean seriously changing some of the laws that govern the relationship between the UK and the Overseas Territories and with the Tories in charge and their friends benefiting from these loopholes that’ll never happen.

  • Dewi

    it’s the last bit i find astonishing:
    ‘The main benefits are that under [the terms of the LDF] HMRC will only go back ten tax years instead of the statutory maximum 20 year period and that it allows individuals with undisclosed UK liabilities to access the favourable terms of the LDF by simply opening an account in Liechtenstein, thus for the first time bringing domestic evasion into such an initiative”
    An invitation to evade surely?

  • Kevin Barry

    Dewi, I’m surprised you didn’t mention Nick Cohen’s piece this morning.

    http://www.guardian.co.uk/commentisfree/2010/nov/14/vodafone-tax-evasion-revenue-customs

    If the government was really interested in bringing in some money they wouldn’t be laying off so many in HMRC.

    What they will do is pick some low hanging fruit, a few people with some dodgy trusts of assets between £10-50 million, maybe a medium ranking Company or two, maybe even one FTSE 500 company, just to show that they are ‘cracking down’, but in all honesty this a losing battle and they have all but admitted it