HMRC is continuing its quest to catch umbrella company contractors with undeclared earnings in offshore savings accounts and this could spell bad news for hundreds of thousands of British residents.
The Revenue stepped up its efforts to curb international tax evasion last year and it believes recovering unpaid taxes from offshore accounts is one of the best ways to rake in more money.
It is thought that HMRC has the personal details of about half a million people it suspects of tax evasion. However, people holding secret bank accounts in Liechtenstein have until the 31st of March 2015 to take advantage of a disclosure facility.
Under the LDF, people making a disclosure will pay full interest plus a 10% fixed penalty on all underpaid liabilities. But, if the error was deemed to be innocent, the taxpayer will not be charged a penalty.
As of the 31st of March this year, 475 people had used the LDF to make successful disclosures, raising £140 million for the Revenue. Originally HMRC had set a target to yield £1 billion from 5,000 disclosures but due to the initial success of the scheme this figure has been revised upwards to nearly £3 billion.
The Revenue had received 1,351 registrations by the end of March this year, but at an average £294,000 per disclosure, experts calculate the LDF will bring in £1.5 billion by 2015.
Banks in Liechtenstein have until October to investigate their clients from the UK but it is now widely expected that this deadline will be pushed back. UK nationals banking in the principality must either join the LDF or declare that they are UK tax compliant and under the terms of the disclosure facility, Liechtenstein banks must refuse to do business with any customers who do not comply.
A tax investigations partner from PKF, John Cassidy, said the uncertainty surrounding a similar disclosure deal with Switzerland has meant the Liechtenstein banks have not yet started their investigations.
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