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Contact Us Professional News - January 2012
Using the Liechtenstein Disclosure Facility
The unique agreement between the Swiss and UK governments means that wealthy Britons who have undisclosed assets in Switzerland will be forced to reveal these from 2013.
Furthermore, HM Revenue & Customs (HMRC) can invoke fines of up to 200 percent for tax evaders who hide money offshore, with the penalty level linked to the tax transparency of the country involved.
However, there are disclosure opportunities available for individuals affected by this agreement or other HMRC crackdowns, providing them with the chance to come clean about tax irregularities connected with offshore bank accounts on favourable terms.
One of the cheapest routes for disclosure is the Liechtenstein Disclosure Facility (LDF), which will run until 31st March 2015. Although this was originally introduced to encourage UK taxpayers who have undeclared investments in Liechtenstein to come forward and make a declaration, it can be used as an umbrella for the disclosure of any tax liability connected with an overseas asset which has not been set up or opened through a UK branch or agent, provided a Liechtenstein connection can be established.
Under the LDF, HMRC has made the following special terms available:
- A 10 percent fixed penalty on the underpaid liabilities, although full interest will have to be paid
- Assessment period limited to accounting periods/tax years commencing on or after 1st April 1999
- The option to choose whether to use a single composite rate of 40 percent or to calculate actual liability on an annual basis
- Assurance on non-prosecution
- A single point of contact for disclosures, which will help the taxpayer if their financial affairs are particularly complex
Unfortunately, the 10 percent fixed penalty is not available for income and gains arising after 5th April 2009, but is still available in respect of earlier years. In some situations, it may be available in respect of undeclared income and gains that have arisen in offshore territories outside of Liechtenstein.
If you would like to make use of the LDF or another method of disclosure, please contact us for further advice.
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