UPDATE 1-UK, Liechtenstein agree tax disclosure deal

* Deal to encourage British clients to disclose accounts

* Special conditions between 2010 and 2015

* Deal affects about 5,000 investors

(Adds details, comment)

By Emma Thomasson

ZURICH, Aug 11 (Reuters) - Liechtenstein and Britain have signed an agreement to encourage British clients with secret accounts in the Alpine principality to voluntarily disclose billions of pounds of untaxed money.

The Liechtenstein government said in a statement on Tuesday the deal provided special conditions between 2010 and 2015 to encourage clients with British tax arrears to declare themselves. It applies to existing clients as well as new clients.

"With this agreement we are creating a stable and reliable regulatory framework and for the client the possibility to make use of an attractive option," said Liechtenstein Prime Minister Klaus Tschuetscher.

The deal is the latest amnesty to be announced amid a global crackdown on offshore tax dodging. Britain has launched a more general programme and the United States and Italy are also encouraging offshore bank clients to come clean.

Swiss bank UBS AG (UBSN.VX) (UBS.N) is trying to settle with U.S. authorities who are seeking the identities of 52,000 wealthy American clients suspected of using offshore accounts at the bank to conceal assets and evade U.S. taxes. [ID:nLA660217]

A spokesman for the British tax and customs office said up to 5,000 British investors could be affected with an estimated 2 billion to 3 billion pounds ($3.3 to 5 billion) in secret Liechtenstein accounts.

The office said in a statement the deal capped penalties on unpaid tax at 10 percent of tax evaded over the last 10 years if the taxpayer makes a full disclosure. The accounts of those who fail to make a full disclosure by 2015 will be closed down.

Liechtenstein banks managed 120.8 billion Swiss francs ($111.5 billion) in client assets in 2008.

BANK SECRECY UNDER PRESSURE

A Liechtenstein government spokesman said Liechtenstein was not disclosing any client data under the deal.

"We are achieving tax transparency without breaching the privacy rights of any clients," he said.

Liechtenstein had been under intense pressure since Germany obtained confidential data on LGT, the country's largest bank, with names of German citizens hiding money in the tiny principality, wedged between Switzerland and Austria.

Germany has accused Switzerland and Liechtenstein of actively encouraging Germans to dodge taxes, estimating the annual loss to government coffers from tax evasion at 100 billion euros.

Facing a crackdown on tax evasion by G20 countries, Liechtenstein and Switzerland -- along with several other offshore centres -- agreed in March to relax their strict bank secrecy rules and embrace tax cooperation rules set by the Organisation for Cooperation and Economic Development (OECD).

Liechtenstein was previously on the OECD's "black list" of uncooperative tax havens, along with Andorra and Monaco, but all three countries were removed from the list in May after committing to adopt OECD standards.

Liechtenstein said it was also starting negotiations with Britain on a double taxation agreement.

Its parliament adopted a tax information exchange agreement with the United States in December and it has initialled a deal with Germany as well as a double taxation agreement with another unidentified OECD country.

The Liechtenstein spokesman said such voluntary disclosure agreements might be possible with other countries, although noted they had to be tailor-made and Germany's tax system was different from Britain's. (Additional reporting by Avril Ormsby in London; Editing by Greg Mahlich and David Holmes) ($1=.6000 pounds) ($1=1.083 Swiss Franc)