Liechtenstein Disclosure Facility (LDF)
In addition to the New Disclosure Opportunity (NDO) HMRC launched the Liechtenstein Disclosure Facility (LDF) a unique tax facility which allows eligible persons to submit a Liechtenstein linked tax disclosure to HMRC at reduced penalties and to cover a reduced disclosure period. Interestingly it allows participation if the Liechtenstein link is historical, newly acquired or a future acquisition in the period of the facility.
- The LDF commenced on 1 September 2009 and will be open until 31 March 2015.
- The facility is open to eligible persons with relevant property and it is governed by a Memorandum of Understanding (MOU) between the UK and Liechtenstein governments (see link below).
- Who is an eligible person? Individuals and companies (partnerships and trusts also) with a beneficial interest in relevant property or who have a UK tax liability in respect of relevant property.
- Relevant property is a Liechtenstein bank account or other financial structure – it is widely defined in the MOU.
- Eligible persons who had Liechtenstein relevant property at 1 September can register as of that date onwards.
- HMRC are offering a ‘bespoke’ service which allows eligible persons to approach them anonymously first of all then if they proceed with an LDF, HMRC will provide a single point of contact and a number of facilities to assist the person in making their LDF disclosure.
- All taxation liabilities can be dealt with under the LDF, including Inheritance Tax.
- The only exception to that rule is taxation liabilities arising from offshore bank accounts outside Liechtenstein opened through a UK branch or agency of that bank. Then the 20 year NDO window would apply.
- The disclosure period is restricted to all years since 1 April 1999 for companies and from 6 April 2009 for individuals, currently therefore only 10 years.
- Penalties under the LDF are restricted to 10%.
- If eligible persons make a complete, accurate and unprompted disclosure they will not be prosecuted.
- The tax liabilities can be calculated by reference to the appropriate tax rates and deductions for each year or an alternative method is offered under the facility – which allows a composite rate of 40% per year to be applied without reference to deductions or different heads of tax.
- Legislation will be enacted in Liechtenstein to support the MOU and require Financial Institutions (FI) in Liechtenstein to contact relevant persons and obtain their confirmation that they already disclosing their UK tax liabilities, are not subject to UK tax liabilities or that they are participating in the LDF.
- Those relevant persons who fail to respond to the FI will find that the FI will potentially close their account and cease to act for them.
Issues arising from the LDF:
The LDF and NDO do overlap and there are several areas which require careful consideration before an approach is made under either facility. For instance:
- Can I acquire relevant property in Liechtenstein now and become eligible for the LDF, benefitting from the restricted disclosure period and reduced penalty, even though I have no other offshore tax matters but an onshore disclosure to make?
- What do I do if I have other offshore bank accounts along with a Liechtenstein account? Should I register under NDO and LDF?
- What will happen if I choose not to participate in the LDF?
- I am an advisor who has assisted clients in opening and managing offshore structures which need to be reviewed and considered in light of the NDO, LDF and ongoing cooperation between countries around the world. What should I do?
How can we help?
Here at BTG Tax we will listen to your situation and advise on the best course of action. What is clear is that there is no hiding place for those with undeclared income and gains offshore and they need to act now.
We have the contacts and facility to assist in the opening of Liechtenstein bank accounts or the setting up of other financial structures. This is not a straightforward area and professional advice is recommended. Through our contacts in Liechtenstein we can ensure you get the appropriate legal and financial advice.
Please contact one of our tax investigation specialists on 0845 678 2903 quoting reference “LDF” to discuss, in confidence, how we can provide a solution for your particular situation.
Alternatively, to contact us directly through the website, please click here and we will get back to you promptly.
Key LDF contacts:
Leo Coyle for Northern Ireland, Andrew McKenna for Scotland and the North, Sue Bradshaw for London and the South, Jeff Millington for the Midlands.
For the latest news on the LDF click here.
For a further explanation of LDF click here.