Over 2,000 UK taxpayers have already made disclosures under the agreement since its launch in September 2009.

The LDF allows taxpayers to disclose to HMRC their use of the facility and only pay 10 per cent of the tax due instead of the usual 100 per cent. They also have to pay 10 years worth of back taxes and interest.

David Hartnett, permanent secretary for tax at HMRC, said the number of disclosures made already exceeded the number they had expected for the full duration of the scheme.

It is estimated over 5,000 UK taxpayers have accounts in Liechtenstein.

HMRC has also approved a Double Taxation Agreement with Liechtenstein which ensures taxpayers of signatory countries are taxed fairly and the respective countries receive their fair share of tax revenue.

Previously, Liechtenstein had been the only country in the European Economic Area without one of these agreements in place.

David Gauke, Exchequer secretary, said: “This government is committed to ensuring that offshore income is properly taxed.

“Today’s agreement takes that commitment forward by providing greater transparency and certainty to the taxpayers of both of our countries about how their income and gains will be taxed.”