Tax Investigation Specialists

WLHTax - Liechtenstein Disclosure Facility


What is the LDF?

The LDF is a way for UK taxpayers with unpaid tax to make disclosures to HMRC of tax irregularities where monies are or have been held in overseas jurisdictions.

What are the advantages of the LDF?

  • You can voluntarily disclose tax irregularities under the LDF between 1 September 2009 and 5 April 2016.
  • HMRC will only recover unpaid tax from 6 April 1999 onwards - HMRC is ordinarily allowed to recover unpaid for up to 20 years where tax fraud has been committed.
  • A fixed rate 10% penalty on the tax unpaid for the year 1999/00 to 2008/09.
  • A fixed rate 20% penalty on the tax unpaid for the years 2009/10 onwards.
  • Guaranteed immunity from prosecution.
  • Ability to have initial “no names” discussions with HMRC prior to making a disclosure.
  • The LDF covers all UK taxes and an election can be made to use the Composite Rate Option (CRO) of 40% as opposed to different rates being charged on the same monies, for example VAT, Income Tax, Corporation Tax.

As I don’t have an existing Liechtenstein account/asset how can I still use the LDF?

If you do not currently have a bank account or asset in Liechtenstein you may still be able to qualify for the LDF. In order to do so, you need to hold “relevant property” in Liechtenstein. This can be done by simply opening a bank account in Liechtenstein or transferring an asset such as an investment portfolio to Liechtenstein. WLH Tax can help you through this process.

To qualify for the favourable terms provided by the LDF, you must have an offshore bank account (which was not opened through a UK branch or agency) or hold an asset in another jurisdiction. This bank account or asset must have been held at 2 September 2009. For example, if you held a bank account in Switzerland at this date, you can now open a bank account in Liechtenstein and participate in the LDF. A further example could be an overseas property in Spain owned at 2 September 2009. In both cases, you would qualify for the preferential terms of the LDF.

Under what circumstances might I not qualify for the LDF?

You might not be able to qualify for the LDF or take advantage of all the terms offered by the LDF if:

  • HMRC has already written to you to tell you that you are being investigated under its Civil Investigation of Fraud/Contractual Disclosure Facility (Code of Practice 9).
  • You are being investigated for a criminal tax matter.
  • You did not hold an offshore asset at 2 September 2009.
  • Your offshore bank account was opened via a UK branch or agency.
  • HMRC wrote to you previously as part of its Offshore Disclosure Facility (ODF) or New Disclosure Opportunity (NDO).

Specialist advice from WLH Tax will help in establishing what terms you can secure as part of your LDF disclosure.

Can I be prosecuted?

As long as you make a complete and full disclosure to HMRC under the terms of the LDF you will not be prosecuted for any tax related offence that you might have committed.

Who is currently using the LDF?

A variety of people are currently taking advantage of the LDF:

  • Those with undeclared assets in Switzerland or other offshore jurisdictions.
  • Those that have “inherited” an issue.
  • Those who have unrecorded trading income going back many years.
  • Individuals who have been through a previous HMRC enquiry but who did not fully disclose all overseas assets.
  • Professionals, for example, lawyers, barristers, accountants and medical professionals, with overseas assets who are particularly at risk from an HMRC prosecution.
  • Elderly people who want to regularise their tax affairs to ensure that future generations do not inherit tax problems.
  • People who require a capital injection into the UK - this might be in order to purchase an asset or invest into a UK business. This is of particular relevance as once offshore funds are “regularised” via the LDF, monies can be re-introduced into the UK without fear of further tax issues.
  • Individuals who are genuinely worried about the existence of the offshore asset and are concerned that HMRC may commence an enquiry into their affairs under Code of Practice 9 -cases of serious tax fraud.

How long do I have to register for the LDF?

The LDF will run until 5 April 2016. If HMRC commences an enquiry into your affairs before you have registered for the LDF, then it is possible that you would not benefit from all of the terms provided by the LDF (see above). You could also end up paying substantially more to HMRC.

WLH Tax would always recommend that individuals register for the LDF as soon as possible.

Does the LDF cover all taxes?

Yes-the LDF covers all UK taxes, including Income Tax, Corporation Tax, VAT, Inheritance Tax, National Insurance, Capital Gains Tax and Stamp Duty.

What is included in a LDF disclosure?

The key point is that the disclosure must be full and comprehensive.

The disclosure will include details of your worldwide income, profits, gains, assets and liabilities, including those not held in Liechtenstein. If you are non-UK domiciled for tax purposes, you will only be required to declare income, profits, gains, assets and liabilities relevant to your UK tax liability. You do not need to provide HMRC with any details on any assets or issues that are not relevant to your UK tax position.

Each case is different and it is vital that advice is sought from WLH Tax before any disclosure is made to HMRC.

What if I don’t disclose and HMRC subsequently catches up with me?

The worst case scenario is that HMRC could undertake a criminal tax investigation and you could be prosecuted for tax evasion. This could result in you going to prison.

If HMRC believes that you should have made a disclosure but chose not to do so, they could commence a civil investigation into your tax affairs. This will be an intrusive and lengthy process and you could face much higher penalties, up to a maximum of 200% of the tax evaded. HMRC could also “name and shame” you by publishing your name and details on its website.

WLH Tax would strongly recommend that any individual who has tax issues should make a voluntary disclosure to HMRC. In this regard, it is essential that advice from WLH Tax is taken at the earliest opportunity.

Call us now

Please call WLH Tax on +44 (0) 207 491 9690 or +44 (0) 207 491 9696 if you wish to discuss the LDF in greater detail.