David Jetuah, Accountancy Age, Thursday 28 October 2010 at 09:17:00

Information exchange agreement with Switzerland could drive taxpayers toLichtenstein amnesty


The UK's groundbreaking deal to exchange tax information with Switzerlandcould drive secret offshore account holders to use the Liechtenstein DisclosureFacility (LDF), advisers have said.

The LDF has had a relatively slow uptake since it began last year, but UKtaxpayers with undeclared income in Switzerland may rush to move their assets inthe wake of the agreement.

The deal could also pave the way for the UK and Switzerland, famed for itsimpenetrable banking secrecy, to adopt a similar disclosure facility to the LDF.

The predictions have been made after George Osborne announced the pactalongside Swiss finance minister Hans-Rudolf Merz.

Asked whether the Swiss deal could inadvertently increase uptake of the LDF,Gary Ashford, head of tax risk, disputes and investigations at RSM Tenon said:"I think the answer is 'yes.'"

For Swiss account holders with UK tax liabilities who have so far snubbed theLDF, they may face stiffer penalties if they rush to use a similar amnesty inSwitzerland.

"There may very well be a Swiss Disclosure Facility on the cards and forthose [UK-resident account holders ] who sit back and do not use the LDF theymay find it harder to use the Swiss version if it is established," Ashfordadded.

Despite a 900m boost to combat tax evasion, HMRC will still have to processthe wall of information that will come out of Switzerland amid dwindling staffnumbers.

Recently, confidential account information has been stolen by employees of anumber of offshore banks before finding its way to several European taxauthorities.

In this backdrop, John Cassidy tax investigation and dispute resolutionpartner at PKF, said: ?Holders of Swiss accounts cannot assume their accountswill remain confidential for ever.?

?An amnesty for accounts based in Switzerland is possible ? but there is noguarantee that any future amnesty will be as generous as the currentLichtenstein Disclosure Facility.

Read more:

Swissoffshore tax deal