FT: Tax haven probe targets rich Britons

Tax haven probe targets rich Britons
By Vanessa Houlder in London

Financial Times
July 22, 2008 9:29:00 AM

About 300 wealthy Britons who secretly salted away more than $B!r(B1bn
($2bn, EURO 1.26bn) in the tax haven of Liechtenstein are facing
investigation and possible criminal prosecution by the UK tax
authorities.

Some clients have been contacted by Revenue & Customs, which says it
will consider prosecuting those who have lied about their assets in
other probes. Inquiries are expected to take two or three years.

Separately, the next phase of Revenue & Customs' investigation into
offshore account holders is set to be launched over the next few
months, along similar lines to last year's disclosures by UK banks. It
is seeking legal notices requiring an initial batch of about 25
foreign banks to reveal information about clients with offshore
accounts.

Since the Liechtenstein tax evasion scandal broke in February,
investigators have received more information from the former employee
of LGT, the bank controlled by the principality's ruling family, who
sold internal bank details to German and other tax authorities.

The revelations were examined in a US Senate subcommittee report last
week. This concluded that the "murky operations" of banks such as LGT
helped US taxpayers evade an estimated $100bn of taxes each year.

Investigators have focused on more than 15,000 LGT clients with total
funds of $B!r(B100bn-$B!r(B110bn invested through 4,000 foundations and other
entities designed to provide anonymity. About 50 countries believe
their citizens have undisclosed assets in LGT, headed by Germany,
which has details of roughly 1,400 foundations. In the US, the
Internal Revenue Service has identified at least 100 US citizens who
hid money in Liechtenstein. Liechtenstein's 15 other banks are coming
under pressure to co-operate with foreign tax authorities.

$B!|(BSuspected tax evaders in Germany are considering suing their
Liechtenstein bank for failing to inform them promptly of the theft of
confidential client information in 2002, a Liechtenstein lawyer said
on Monday, writes Bertrand Benoit in Berlin.

Information about trusts held by LGT Treuhand for German nationals was
obtained by the BND foreign intelligence agency and given to the tax
authorities, leading to the biggest tax evasion inquiry in Germany.

Heinz Frommelt, a lawyer in Vaduz, said he had been approached by
German lawyers inquiring about the prospects of possible damages
claims by their clients, some of whom are now under investigation.

He said the alleged tax evaders argue they might have used an amnesty
offered by Germany in 2004, had they known then about the theft of the
data.

"There is a huge amount of anger among LGT Treuhand clients in Germany
right now," Mr Frommelt said. "A similar damage suit was turned down
by Liechtenstein's highest court in 2005, but you could argue that the
existence of the amnesty adds a new element.

"My advice to the colleagues is for their clients first to settle
their issues with the German tax authorities, then observe a cooling-
off period before they seek to recover damages, if only because they
need to quantify these damages."

LGT, LGT Treuhand's parent company, said on Monday: "Of course there
are clients who have mentioned this issue and expressed their
dissatisfaction. We have rarely faced concrete claims, however."

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