Liechtenstein disclosure facility

Hot on the heels of the New Disclosure Opportunity (NDO), on 11 August 2009 HM Revenue & Customs (HMRC) announced another process for making voluntary disclosures, known as the ‘Liechtenstein Disclosure Facility’ (LDF). 

From 1 September 2009 to 31 March 2015 HMRC are giving Liechtenstein account holders who have a UK tax liability the opportunity to make a voluntary disclosure and in return, HMRC will charge a fixed penalty of 10% on unpaid duties.  This is significantly lower than the maximum 100% that could be charged should HMRC start its own tax investigation. 

In an unprecedented move, if a voluntary disclosure is made under the LDF, HMRC will only seek unpaid tax up to a maximum of 10 years. Compared to the NDO where HMRC can go back up to 20 years, the potential for saving significant amounts of tax, interest and penalties using the LDF is huge.

Those who hold assets and/or investments (including those held by Foundations, Anstalts or Stiftungs) in Liechtenstein as at 1 August 2009 can participate in the LDF from 1 September 2009.  The LDF will be available to those who move their investments into Liechtenstein after 1 August 2009 from 1 December 2009 i.e. after the end of the notification period for the NDO. 

A new Tax Information Exchange Agreement between Liechtenstein and HMRC means UK residents who hold accounts, investments or assets in Liechtenstein can be almost certain their details will be passed to HMRC. As part of the deal with HMRC, the Liechtenstein authorities will also be directly encouraging such UK residents to make voluntary disclosures to HMRC and those who fail to do so face having their accounts closed.

Unlike the NDO, this new facility might be considered to be an actual (if partial) ‘tax amnesty’.  Providing a full disclosure is made, HMRC has guaranteed it will not prosecute those that come forward. This, and the time limit of only 10 years gives clients potentially the best deal offered by HMRC.

It is critical that anyone, and especially those with trust, residence or domicile issues, who has concerns about their tax position seek professional advice to ensure their affairs are structured properly and to make sure all appropriate reliefs and allowances are claimed. 
 
BDO has extensive experience in tax investigations and can provide specialist advice to anyone thinking of making a voluntary disclosure under the LDF

Please contact us for confidential, no obligation advice at ndo@bdo.co.uk or by emailing Stuart Gerber or Fiona Fernie.