This month the BBC Panorama programme finally caught up with one of 2008’s big tax evasion stories. Broadcast on 2nd February 2009 Panorama reported on how HMRC purchased data, stolen from a Liechtenstein bank; in order to obtain offshore bank account details of UK residents banking in, what was until then, a bastion of secrecy.
HMRC reportedly paid £100,000 for disks originally obtained by German spies! In what could have been a scene from “Spooks”, 50-year-old Heinrich Kieber, an IT worker at LGT Trust, part of the Liechtenstein royal family’s banking group, stole electronic files containing confidential information about the bank’s clients and sold them to the German intelligence service, the BND, for a reported five million Euros. The taxman in the UK then coughed up £100K for a share of the spoils. David Hartnett, HM Revenue and Customs’ chief Tax Inspector, told Panorama: “We’ve got more than smoking guns: smoking tanks, smoking howitzers. We have got very solid clear information about individuals and some corporates who thought they had hidden money in Liechtenstein forever and that it would never be uncovered.”
The tiny principality snuggled in the Alps between Austria and Switzerland has only
35,000 residents but 75,000 registered businesses. It’s one of only three states on an Organisation for Economic Cooperation and Development blacklist of “uncooperative tax havens”. The other two are Andorra, in the Pyrenees, and Monaco – the yachting playground of the super rich. Liechtenstein is ruled by a royal family, which also owns LGT, the biggest bank.
Until now Liechtenstein Stiftungs (similar to UK Trusts) have been covered with a full burkah of secrecy.
What’s it mean for UK taxpayers with accounts in Liechtenstein?
For now HMRC investigators only have account details for about 150 British residents. HMRC are saying that these are now being actively investigated. We’ll have to wait and see if it leads to any high profile criminal prosecutions for tax fraud: as it did in Germany (e.g. Klaus Zumwinkel, the ex-boss of the German Post Office and the first big name to be convicted of tax evasion, this year).
But HMRC believe that thousands of Brits have offshore bank accounts in Liechtenstein and reports suggest they are now attempting to get those details too; maybe paying further informers for the secret information. There are stories that another bank has paid blackmailers millions of pounds to keep client information secret.
The tax investigators suspect that most account holders are tax cheats who at the very least won’t have declared the substantial interest arising on the offshore bank accounts. The Tax Inspectors also think that the source of the deposits will be “black money” from tax fiddles as well.
Anyone holding a Liechtenstein bank account or connected to a Stiftung may find their tax affairs being probed in way they thought would never happen. With HMRC rumoured to be about to launch another so called Tax Amnesty (the New Disclosure Opportunity: like last year’s Offshore Disclosure Facility) the may be the time for anyone with such structures to review their affairs and consider making their peace with the taxman: before they launch the howitzers!
What does it mean for other tax havens?
There are over 50 tax haven countries around the world and 18 of them are British protectorates or Crown Dependencies, e.g. the Isle of Man, the Channel Islands, Bermuda, Anguilla and the Caymans Islands. A key feature of each is limited reporting rules and a general golden rule of secrecy (omerta). The evidence of tax fraud by some very wealthy and influential members of society in Germany, the UK and the USA means that there may now be concerted action by the OECD to finally lift the veil forever.
The new US President Barack Obama sponsored the “Stop Havens Tax” bill as a senator, and as a presidential candidate he said:
“It’s time to close corporate loopholes, shut offshore tax havens, and restore balance and fairness to our tax code.”
The German Chancellor, Angela Merkel, is also spearheading a campaign to force Liechtenstein, Andorra and Monaco to end their banking secrecy. This has already happened in respect of money laundering of suspected terrorist and drug dealing activities. The OECD now want to extend the open reporting to tax crime as well, as it already does in most of the rest of the world.
This may not be the end of offshore banking secrecy, but to misquote Winston Churchill, it may be the beginning of the end.
If you are worried about the tax consequences of having an offshore bank account, or other offshore assets, or you need more information about the 2009 Tax Amnesty: The New Disclosure Opportunity, or you are worried about a Tax Enquiry, then phone Paul Lynam NOW for a free confidential discussion: on
0845 643 9997