Tag Archives: tax evasion

The End of Tax Evasion

The days of tax evasion are over. As for avoiding taxes, avoidance is simply evasion that the government hasn’t yet turned into evasion and made illegal. The moment Swiss banks and the like decided to computerize their accounts the game was up for tax evasion. There is no such thing as a secure computerized database; eventually they all leak like sieves. Sooner or later somebody will pass the financial details of tax evaders on to the authorities – possibly even the bank itself will be the informant should they be placed under enough political or commercial pressure. After the disclosures of Heinrich Kieber and Hervé Falciani, the world of tax evasion will never be the same again.

Kieber worked in the IT department of the Liechtenstein Global Trust (LGT) bank in Vaduz, the capital of the Principality, between 2000 and 2002. Someone in the bank had the bright idea of computerizing all the bank’s records – they imagined their clients being impressed by the efficiency with which their records were managed. Kieber was part of the team undertaking the task, but while employed there he surreptitiously downloaded the financial details of clients onto four DVDs. In 2006 he was paid nearly 5 million Euros by the German tax authorities for a list of German clients of the bank. As an extra bonus he was also given a new identity. Subsequently Kieber was paid a further £100,000 by the UK tax authorities for a list of 300 British clients. Kieber also spilled the beans on LGT’s operations on behalf of American clients to the US Senate Permanent Subcommittee on Investigations, where he described in detail the bank’s procedures for obfuscating the provenance of assets. A transcript of his evidence is even available online.

Then there was Hervé Falciani, who is in the news today. He was arrested by Geneva police late in 2008 for data theft. When he was working as a software engineer at HSBC’s private bank in Switzerland, Falciani downloaded details on 24,000 clients. He skipped the country, and then passed the details on to the French authorities, and consequently they recovered nearly 500 million Euros in unpaid taxes. The French also forwarded information to their counterparts in the UK and elsewhere. Only now has the information hit the UK news. HMRC has been quietly pinning down the UK tax evaders in Falciani’s lists, and are instigating civil actions so as to maximise the tax take from the evaders.

The authorities have won the battle, but will they win the war? With the end of tax evasion, and tightening of avoidance rules, it means that high net worth individuals (HNWIs) are faced with a difficult choice: stay and watch their fortunes progressively stripped away, or take flight to jurisdictions that recognize and welcome the enormous positive impact that these people provide for national economies.

In The Flight of the Golden Geese (the e-book will be out soon) we take a long hard objective look at the rationale of the taxation habits of governments, and lay out what HNWIs can do to ensure that what is theirs, remains theirs.

Contract signed

David and I have finally signed the contract for Flight of the Golden Geese with Oyster Point Press. We expect the book to be available around September. Between now and then we have the job of getting the marketing started … informing all our contacts in the press and media in order to maximise the impact of the launch. I would be grateful to all the readers of this blog for any help in this endeavour. Please ask any of your contacts in the press and media who would like to know more about the book to send me a message on the Contact page of this website, which will guarantee they reach me.

Take That tax avoiders

The UK government has in place some very generous tax relief schemes for genuine business investment in British creative industries, with the intention of helping the country’s film, television and video production companies to compete globally.

The HMRC however claim that the system is being abused. Judge Colin Bishopp has agreed with them. A company called Icebreaker, made up of a number of different partner companies, put money into schemes that generated losses of £336million, and so could claim huge tax relief. The tax tribunal ruled Icebreaker was set up as a deliberate attempt to avoid paying tax.

Gary Barlow, Howard Donald and Mark Owen from the pop group Take That – along with manager Jonathan Wild – were among about 1,000 people who put money into the scheme. They will now become liable for the tax.

In the Flight of the Golden Geese both David Lesperance and I are adamant that all investments in such schemes are folly. They will all be outlawed sooner or later, laying investors open to huge repayments, and possibly even fines or worse … jail time. We make it quite clear, the only safe way of minimizing tax liability is to pay up all tax owing and fly the coop to more welcoming climes.

Property is taxation in waiting

There’s a great article in the Sunday Times today (March 16, 2014), all about the perils of British expat’s in EU countries. If ever we needed proof that governments are thrashing around, frantic to tax everything in sight, then this is it.

In France you have to declare bank accounts held in other countries you are fined €1500 per account per year; this includes PayPal. One expat has been fined a total of €25,000 because he had totally forgotten about a dormant account.

Of course the real target is property. Renting out a second home in France now incurs a 15.5% ‘social charge’ on top of a %20 tax, and this cannot be offset against British Income tax. Selling a second home incurs a 19% capital gains tax, and a 15.5% ‘social charge’ if the property was owned for less than 22 years.

No Hiding Place

How are the mighty fallen. Uli Hoeness, hero of Germany’s 1974 World Cup winning team, and president of Bayern Munich has been sentenced to three and a half years in jail for tax fraud.

Hoeness, had admitted hiding large sums in a Swiss bank under a “voluntary disclosure” scheme, hoping to avoid trial by paying the taxes owed plus a 6% interest. This is far more generous than the US tax evasion amnesties of 2009 and 2011, with fines being a substantial percentage of the total capital, not just the tax owed. Of course, any one going down this route must declare everything. Further revelations showed that Hoeness had been dishonest when disclosing the scale of his assets, hence the court case.

Subsequently 26,000 German tax evaders have opted for voluntary disclosure. If a national icon can be taken out, then no one is safe.

All around the world governments are tracking down tax evaders with a vengeance. No one is safe from the tax police. Once you are in their crosshairs there is no escape. In the age of computerization it’s like shooting fish in a barrel. One way or another, they will find out the scale of any individual’s tax evasion. As we are saying in The Flight of the Golden Geese, the days of tax evasion are over. The only legal way for the rich to protect their wealth from their country’s tax grab is to give up their citizenship, and leave for friendlier jurisdictions.