The Chief Secretary to the Treasury, Danny Alexander, in September 2012, made a number of announcements about actions the Government is taking to tackle tax avoidance. The operation of two components of the strategy were highlighted – the workings of the ‘Affluent Unit’ and the ‘Liechstenstein Disclosure Facility’ agreement.
Her Majesty’s Revenue and Customs (HMRC) Affluent Unit, launched in October 2011, brings together 200 specialists from across HMRC using new and innovative risk assessment techniques to identify areas where wealthy individuals are avoiding or evading taxes and duties. The unit is being expanded to deal with taxpayers with a net worth of £1m instead of the current £2.5m. An extra 100 inspectors and specialists will be recruited to cover the tax affairs of 200,000 more individuals, an increase from around 300,000 under the current threshold, to the 500,000 wealthiest people in the country.
The Liechtenstein Disclosure Facility (LDF) is an agreement between the governments of Liechtenstein and the UK which enables UK residents to declare previously undisclosed liabilities to HMRC. It is part of HMRC’s broader drive against offshore tax evasion and will run until 5 April 2016. The HMRC team working on the LDF is being doubled in size and is now expected to bring in £3bn, over £2bn more than anticipated when the agreement was signed. The LDF is underpinned by a commitment from Liechtenstein Financial Intermediaries that all their UK clients will be tax compliant. Any clients who cannot demonstrate compliance will have their financial services withdrawn or be subject to other sanctions.
The Chief Secretary also announced that HMRC and the Cabinet Office have been tasked with looking into how the Government can use the procurement process for government contracts to deter the very small minority of companies and individuals that do so from evading tax and making aggressive tax avoidance arrangements.