Liechtenstein Disclosure Facility

Worried about making a tax disclosure?  Please call our hotline on 0845 351 0090.

On 11 August 2009 HM Revenue & Customs (HMRC) announced a new process for making voluntary disclosures, known as the ‘Liechtenstein Disclosure Facility’ (LDF). 

Until 5 April 2016 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 up to 5 April 2009 and 20% for tax years thereafter.  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 from 6 April 1999 onwards. Compared to an ordinary tax disclosure 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 had assets and/or investments (including those held by Foundations, Anstalts or Stiftungs) in Liechtenstein as at 1 September 2009 can participate in the LDF.  The LDF is also available to those who move investments into Liechtenstein from another overseas jurisdiction provided that they had overseas assets as at 1 September 2009. 

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.

Providing a full disclosure is made, HMRC has guaranteed it will not prosecute those that come forward. This, and the exclusion of tax liabilities prior to 6 April 1999, gives clients potentially the best deal offered by HMRC to date.

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 on 0207 893 2673 or by emailing Stuart Gerber or Fiona Fernie.