More than 2,400 people have come clean about unpaid taxes as
a result of the Liechtenstein Disclosure Facility agreement between the UK and the tiny
principality, with £363 million (around $564 million) already paid in tax bills.

The LDF is now expected to bring in up to £3 billion by 2016
based on the current numbers of disclosures, according to HM Revenue &
Customs, the UK
tax authority.

HMRC said that the average size of a settlement under the LDF so far was £186,023; a total of 48 settlements have been for amounts between £1 million and £5 million. 

The figures were issued as the jurisdictions prepared to
sign a double taxation agreement today. “The DTA will remove obstacles to
investment and other cross-border economic activity and will give businesses
increased certainty about their tax treatment,” HMRC said in a statement. The
agreement, which is the first of its kind to be forged between the two
countries, will be signed in London by Dr Klaus
Tschütscher, Liechtenstein’s
prime minister, and David Gauke, Exchequer Secretary to the Treasury.

The agreements form part of a number of pacts the UK, and other major countries, have signed with
financial centres such as Liechtenstein
and Switzerland
to prevent leakage of tax revenue and hence help to plug big budget deficits.
The UK and Germany, for example, have inked bilateral
disclosure agreements with Switzerland.

Declaration

Liechtenstein
and the UK
were also due today to sign a third joint declaration co-operation over tax
matters, which is designed to clarify the LDF and other compliance
arrangements. This will provide a “Single Charge Rate” of 50 per cent that
Liechtenstein investors might apply to calculate undisclosed UK tax
liabilities for the 2010/11 financial year.

“The Government is determined to clamp down on tax avoidance
at home and abroad. The UK
has the largest tax treaty network in the world but, until now, Liechtenstein
was the only country in the European Economic Area we had no agreement with.
This new treaty and the existing disclosure facility show that the net is
closing on those who try to evade their UK tax liabilities by using
offshore structures - there are fewer and fewer places to hide,” Gauke said.

Dave Hartnett, Permanent Secretary for Tax at HMRC, added: “HMRC
originally estimated the number of people who would register for the disclosure
facility at 2,000, and that it would probably produce £1 billion. In light of
the ongoing success of the LDF we now anticipate the arrangements will produce
up to £3 billion from a much larger number of people.”

The LDF was signed in August 2009, originally designed to
run from 1 September 2009 to 31 March 2015 but it has been since extended to 5
April 2016. The yield of £363 million is made up of £296 million generated from
settled cases and £67 million paid in cases not yet settled.