Pictured above: Jeff Millington

The recent furore surrounding the handing over of offshore banking details to Wikileaks for future publication, along with the public announcements about a tax probe deal between the UK and Switzerland, highlights that the ongoing attack on offshore centres is not going away, warns Jeff Millington, director at BTG Tax in Birmingham.

In a bid to root out undeclared funds held in Switzerland HM Revenue & Customs has commenced criminal investigations into bank account holders there with a view to prosecutions with maximum publicity.

Mr Millington said: "A spate of serious tax fraud inquiries by the agency's Specialist Investigations Office, with more to come, have been opened on the back of offshore bank information. It suggests that finally HMRC has analysed the vast amount of material obtained from its 300 bank information notices.

"The naming and shaming of those caught will undoubtedly be a high priority with HMRC to achieve maximum effect.

"In a clear and simple message HMRC is spelling out - if you have an offshore bank account filled with funds and generating income which has not been declared for tax purposes, then they will be catching up with you. When they do you will be subject to a criminal tax investigation or if you are lucky a serious tax fraud investigation.

"The aim will be to liberate you of up to 75 per cent of your offshore funds and, if you are successfully prosecuted, a prison sentence of 18 months to two years. You will also be publicly named on the HMRC web site for a year - with details of your tax failings there to read by all of your personal and business acquaintances."

However, none of this need happen.

Mr Millington added: "The Liechtenstein Disclosure Facility (LDF) is open to all with an offshore asset, as long as a Liechtenstein asset is acquired immediately and LDF registration follows suit.

"That asset simply needs to be a bank account or similar with a minimal £10-20k investment. Tax liabilities are then restricted in many cases to approximately 20 per cent of the capital currently held offshore.

"Importantly, all undeclared tax issues overseas and onshore can be swept up in the facility. Penalties are restricted to ten per cent of the tax and prosecution is guaranteed to be avoided along with naming and shaming as long as a full disclosure is made."

But what about the Swiss deal? Surely that would be more beneficial especially with its unique opportunity for participants to retain their anonymity?

He continued: "The Swiss deal focuses on only Swiss assets and will not be better than the LDF - according to HMRC. It involves the withholding of taxes on income arising on the Swiss funds at a rate yet to be agreed - but at a rate which is unlikely to be below 40-50 per cent to match up with current UK higher rates of taxation.

"Waiting for the terms of a Swiss tax deal, which is unlikely to be all encompassing and as beneficial as the LDF, particularly for those with offshore tax issues outside Switzerland and involving undeclared UK funds, is a brave choice given HMRC's current approach to offshore tax evaders.

"The leaking of offshore banking/investment data appears to be becoming a regular feature. This coupled with HMRC gathering information indicates there is nowhere to hide offshore. Those with concerns about offshore tax matters for themselves or a client should take advice from a local specialist now before it is too late to benefit from the LDF."

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