Liechtenstein Disclosure Facility (LDF)

The LDF is a special agreement with the government of Lichtenstein.  It is very different from any other HMRC ‘amnesty’ and runs until 31 March 2015.

Whilst there is no need for hasty action, it would not be wise to delay indefinitely because you will not be able to obtain the benefits of the LDF if you are under investigation by HMRC for suspected serious tax fraud, or have been arrested for a criminal tax offence.  If you are worried that the scale of your tax problem might bring within either of these categories you need to act quickly to secure your position under LDF, which brings with it the guarantee of non prosecution.

Call us on 0845 643 5450 if you are worried about this.

Key benefits of the LDF

• Recovery of unpaid tax only extends back to 6 April 1999, rather than potentially 20 years in all other types of investigation.

• The LDF includes a no prosecution guarantee, so long as the funds are not connected with wider (ie non-tax related) criminal activity.

• No application of the “naming and shaming” provisions of s94 FA2009.

• There is an optional 40% composite rate of tax to cover all duties.  This could represent a major saving on the strict liability. There are also other benefits associated with the composite rate which can remove liability on predecessors in interest, eg undeclared estate liabilities.

• Taxpayers can opt in to LDF even if they are currently under investigation by HMRC, so long as they have not been formally notified that they are under investigation for suspected serious fraud or have been arrested for a criminal tax offence.

• Penalties on unpaid tax usually fixed at 10%, but can be higher under certain circumstances

• Initial discussions with HMRC can be held on a no-names basis

Further Information

HMRC have published an extensive set of Frequently Asked Questions. To view these click here. Please note that, although we try to keep these FAQ’s updated on our website, HMRC are continually adding to them and occasionally there may be additional material on HMRC’s website.

The evolving nature of the LDF

The LDF is a very different process from any other tax “amnesty”. Furthermore, it is apparent that the precise meaning of the terms of the LDF is an evolving process.  We are in regular contact with the experts at HMRC and with our fellow leading practitioners on LDF as the landscape changes.  This is because the LDF is based on a Memorandum of Understanding (‘MOU’) between the UK and Liechtenstein authorities.  The MOU deals with the main issues, but lacks the depth of detail that would be found in equivalent tax legislation, so there are therefore more issues which are open to interpretation. These then require clarification and interpretation as real-life situations are brought before HMRC for a ruling.

Please call us for a no-obligation discussion if you are uncertain as to how any aspect of the LDF applies to you.

The two main lessons from all this are:

• It is possible to obtain the benefits of the LDF in a wide range of circumstances, including retrospectively by acquiring relevant property, but

• The process is fraught with complexities and potential pitfalls, so expert advice is essential for anybody considering an LDF disclosure.

However, the potential benefits of the LDF are very attractive, and extremely large savings can be achieved. So if you have tax liabilities connected with an offshore bank account you should definitely explore your options, especially if the liabilities go back earlier than 6 April 1999.

Call us on 0845 643 5450 for a confidential no obligation discussion if you think you may be affected.