According to George Bull, head of tax at Baker Tilly, the UK and Liechtenstein governments want to ensure larger sums are transferred into Liechtenstein and declared under the LDF.
The warning follows the signature of the ‘second joint declaration concerning the MOU relating to taxes between Liechtenstein and HM Revenue & Customs’ (SJD) earlier this month by the two countries.
The declaration, or SJD, reiterated HMRC’s calls for any deposits made into Liechtenstein institutions to be “meaningful and of sufficient value and permanence to reflect the spirit of the MOU”.
Bull said: “The governments clearly is of the view that opening only token accounts does not meet with the spirit of the original memorandum and have issued a further joint declaration.”
However, HMRC has still not put a fixed figure on what constitutes a “meaningful” amount and, as reported in July, there has been wide speculation as to how much, or how little, an investor needs to disclose in order to qualify for the LDF.
Frank Strachan, senior manager, national tax investigations, at Grant Thornton, suggested the decision to toughen the terms has been taken to protect Liechtenstein institutions, who hope to gain business from the agreement.
“I believe the position has been clarified so that Liechtenstein can seek to protect and develop their wealth management offering,” he said.
“Clients who are merely bed and breakfasting their investments in Liechtenstein, to take advantage of the LDF, aren’t providing the sustainable source of new investment that the Liechtenstein financial institutions are seeking.
“That said, the account opening criteria has dropped markedly due to the competitive market which has arisen within the Liechtenstein banking community.”