Liechtenstein disclosure facility extended
Planned originally to run from run from 1 September 2009 until 31 March 2015 , the Government has now announced that it will extend the final deadline for the Liechtenstein disclosure facility (LDF) to April 2016.
The facility was introduced in response to the introduction by the Government of Liechtenstein of a five year taxpayer assistance and compliance programme under which financial intermediaries in Liechtenstein will need to be satisfied that, where appropriate, clients are declaring Liechtenstein investments to HMRC. Thus, if you are a UK taxpayer – or if your Liechtenstein Financial Intermediary thinks you may be – they will be in touch with you about this. HMRC has launched the LDF to help UK taxpayers make a disclosure where appropriate.
The facility has been introduced to help UK taxpayers with undeclared investments in Liechtenstein to come forward and get their past and future tax affairs on the right footing. By coming forward under LDF, they will be able to take advantage of a number of special terms:
- a 10 per cent fixed penalty on the underpaid liabilities (full interest will have to be paid);
- no penalty where an innocent error has been made;
- assessment period limited to accounting periods/tax years commencing on or after 1 April 1999;
- the option to choose whether to use a single composite rate of 40 per cent or to calculate actual liability on an annual basis;
- assurance about criminal prosecution;
- single point of contact for disclosures.
Although it got off to a slow start, LDF registrations have increased recently now that those with accounts have seen the details of the tax treaty with Switzerland. Many take the view that signing up to LDF is a better option than the Swiss agreement. As a consequence the Government has decided that it is sensible to extend the deadline for the LDF. Given that predictions for tax received as a result have risen from £1bn to £3bn, this is hardly surprising.
Further information about the LDF can be obtained by going to the H M Revenue & Customs web site at www.hmrc.gov.uk/disclosure/liechtenstein-disclosure.htm.