Britain forks out £100,000 for the names of 100 known tax dodgers

THE identities of wealthy British tax evaders will be kept secret, even though UK tax authorities now have access to their details, it emerged yesterday.

HM Revenue and Customs (HMRC) has admitted it paid 100,000 for the stolen details of about 100 Britons who evade an estimated 100 million in taxes through Liechtenstein.

But the names will only be unveiled in the improbable event of a criminal prosecution.

A spokesman for HMRC admitted this was "highly unlikely", because it was so difficult to prove tax evasion in court and it would cost taxpayers too much to pursue a trial.

Of an estimated 130,000 inquiries into alleged tax fraud last year, only a "handful" ended up in criminal trials.

However, the HMRC spokesman said anyone who volunteered that they were a tax dodger would receive a more lenient punishment. "The most important factor for someone who is a tax cheat is to come forward. This is one of the best ways to get a heavy discount on the penalty," he said.

The UK has allied itself with Germany and the Netherlands after paying to obtain computer discs containing details of those who use mechanisms in Liechtenstein to avoid tax.

While the Germans paid more than 3 million for the data, the UK handed over only a fraction of that. HMRC officials were offered the discs by a whistleblower two years ago but decided to wait to scrutinise how accurate the German authorities believed the intelligence was.

Dave Hartnett, the acting chairman of HMRC, warned there was no place to hide for tax dodgers.

"Most people under investigation have substantial amounts to pay, with at least 100 million tax at risk in the UK. HMRC is determined to protect the UK's tax base from evasion and in doing so we will use all the statutory powers we have," he said.

The row over tax evasion in Liechtenstein swept through Europe this month, after the German authorities raided dozens of offices and homes in pursuit of evaders. The controversy has already cost the millionaire Klaus Zumwinkel, the boss of Deutsche Post, his job.

Peer Steinbrueck, the German finance minister, has vowed to broaden the quest for hidden cash beyond Liechtenstein, to include other countries with banking secrecy rules, such as Switzerland, Luxembourg and Austria, all of which border Germany. Switzerland and Luxembourg, whose laws prohibit the revelation of bank information except in criminal cases, have sought to distance themselves from Germany's crackdown.

Switzerland is home to trillions of dollars in offshore savings, and Hans-Rudolf Merz, its finance minister, shrugged off links to his country, in a move that underscores the stakes in the war of nerves between Germany and its neighbours. "I fail to see how problems for Switzerland could arise," he said. "This is about Liechtenstein."

GUARANTEE OF ANONYMITY FOR WEALTHY

THE tiny principality of Liechtenstein is one of three countries to be blacklisted by the OECD for failure to co-operate with a clampdown on tax avoidance.

With a population of around 35,000, Liechtenstein has a banking system shrouded in secrecy.

The OECD named it, along with Monaco and Andorra, as a country that could do more to clean up its tax laws. It has also been accused of condoning money laundering, and tax evasion.

Non-residents can set up a foundation, allowing them to avoid taxes. Foundations also minimise requirements to file returns or accounts and guarantee anonymity for the investor.

There is no need to keep accounts or submit financial statements if the foundation does no business or trade.

If the foundation qualifies as an offshore company, it is not subject to income tax or capital gains tax in Liechtenstein. The only requirement is to maintain an "office" in Liechtenstein, but this can be a mailing address.

Informer given new identity by Germans

Allan Hall

in Berlin

THE whistleblower who informed on leading British businessmen with secret bank accounts in Liechtenstein has been given a new identity by his German secret service handlers.

Agents for the BND – the German equivalent of MI5 – is treating reports of a contract on his life seriously, as the people he has betrayed have both the means, and motive, to endanger his life.

Heinrich Kieber, 42, a Liechtenstein native and former convict, has now been spirited abroad – possibly to Australia – after informing on both Britons and Germans for money.

Kieber was paid 3 million by the BND for a computer disc which held the names of 1,000 rich and powerful individuals who are suspected of avoiding 3.5 billion worth of tax.

Kieber is a former employee of LGT, a private bank owned by Liechtenstein's royal family.

According to fellow bank employees, he only worked part-time as he suffered from the effects of surviving a plane crash which left him injured.

A source close to the BND said: "The people he fingered want to see him sleeping with the fishes."

A neighbour of "loveable Henry" as he was known locally in Vaduz, Liechentensein's capital, was quoted in one German newspaper as saying: "We heard he had gone to Australia.

"He was always banging on about moving there."