In September 2009 HMRC introduced the Liechtenstein Disclosure facility (LDF). It arose from an agreement between HM Revenue & Customs (HMRC) and the government of Liechtenstein for those with ‘relevant property’ in Liechtenstein. Although the LDF which was primarily intended as an offshore disclosure facility it was also possible to disclose domestic matters and still retain the favourable terms.
The LDF was available to individuals, trusts or companies and was originally intended to be available from September 2009 to 31 March 2015. The deadline was extended to 5 April 2016 but the facility was closed early on 31 December 2015.
To qualify for the LDF a taxpayer could not be linked to another HMRC disclosure facility, and must not have previously been the subject of a criminal investigation.
As Lichtenstein Jersey is a Category 1 country, so far as penalties are concerned, failure to remedy any tax compliance failure could have resulted in penalties of 100% of the tax (again) as part of any Settlement, plus interest.
The key terms of the LDF
Under the LDF, a taxpayer was required to:
- make a Disclosure within 7 or 19 months of being registered under the JDF depending upon the basis of calculation
- disclose irregularities from commencement or back to 6 April 1999, whichever was shorter
- all taxes at the actual rates for the year or a flat rate of 40%
- interest on all tax paid late
- No liability for any period prior to 6 April 1999
- a penalty capped at 10% of the tax due for the 10 year period ending 5 April 2009, thereafter 20%
- higher penalties of 30% for 2011/2012 onwards as the inaccuracy related to a Category 1 country
- make a payment within 30 days of the application date
- disclose all their assets and liabilities as at 5 April prior to the date of disclosure
- be told whether their disclosure was accepted within 9 months
The scope of the facility was reduced in some cases from August 2014.
What taxes were covered?
Under the LDF, the following taxes were covered:
- Income tax
- Capital gains tax
- Inheritance Tax
- Value Added Tax
- Corporation Tax
- Employment taxes (PAYE, Employees NIC and Employers NIC)
How was Haines Watts able to help?
Haines Watts was able to:
- Assist in obtaining the necessary ‘Relevant property’
- Register those who wished to make a disclosure to HMRC under the terms of the LDF
- Manage the process throughout for them
- Discuss matters with HMRC initially on a no name basis
- Agree with HMRC in advance how matters were to be treated
- Calculate the potential tax liability allowing taxpayers to keep their anonymity until they wished to disclose
- Determine how matters would be treated and taxed with HMRC prior to registering under the LDF
- Discuss with the taxpayer how to proceed with the disclosure
- Seek time for payment of the amount due
- Complete all relevant documentation
- Negotiate a full and final Settlement with HMRC as necessary
If you wish to discuss this or any other matter with a member of the team, please contact us.