Plus ça change – plus c’est la même chose
Two and a half years ago the Liechtenstein Disclosure Facility was launched to encourage those with undisclosed offshore income and gains to make voluntary disclosures to HMRC and regularise their UK tax affairs.
At the time it was first announced it was intended that all those who wished to avail themselves of the facility should register by 31 March 2015, with taxpayers having either 7 or 10 months to complete a full disclosure from the date of registration, depending on what tax treatment needed to be adopted.
This week the Treasury and HMRC have announced that the period available in which to register has been extended by a year: to 31 March 2016.
I believe there are a number of reasons for the extension:-
The extension is a positive step but I do not believe that those with disclosures to make shouldn’t wait until the last minute.
Clearly the level of benefit derived from the terms of the MOU governing the Liechtenstein Disclosure Facility decreases as time passes since the period over which back duty will be sought is extending and the number of years in which the penalty will be limited to 10% is remaining static meaning that both the tax bill and the penalty will only get higher the longer a taxpayer waits to come forward.
Moreover, it is unmistakably the case that the net draws ever closer around tax evaders. This is a result of both the increased information exchange between different tax jurisdictions and also the apparent ease with which information can now be “removed” from financial institutions and passed on to the authorities.
Thus the extension to the LDF, whilst welcome, doesn’t change the message to those with undisclosed tax irregularities: if you want to sleep easy, disclose – and the sooner the better!
9 February 2012