HMRC continues to pursue outstanding tax liabilities arising from offshore assets through its recently set up Offshore Co-ordination Unit (OCU). The UK-Swiss tax agreement looms large in 2013, and there have been recent changes to the Liechtenstein Disclosure Facility (LDF).The LDF continues to be the most beneficial facility to deal with outstanding tax issues involving both offshore and onshore matters.
The deadline for participation has now been extended until 31 March 2016. However, the beneficial terms still only apply to the years 1999 to 2009 inclusive.
The Liechtenstein financial community has increased the level of investment required to acquire a relevant asset in Liechtenstein which enables participation in the LDF. Previously, investments as low as £10,000 were acceptable. Now, at least £50,000 of funds or assets will have to be invested. It makes sense to act sooner rather than later as this may rise even further.
As part of the new LDF processes, a certificate of relevance must be obtained from the Liechtenstein intermediary which effectively proves the investment into the asset and the nature of the relationship with the bank. This has slowed down the speed of LDF registration as the certificate is needed pre-registration and will only be issued once the funds have been transferred and all the original account paperwork has been supplied to the bank.
Interestingly, individuals can now self-certify that they are tax compliant in response to a request from a Liechtenstein intermediary about their tax affairs. Previously, this had to be certified by a UK tax practitioner or other similar professional person. In comparison, the Swiss-UK tax agreement will require such professional certification. A word of caution however, the backing for that self- certification may be requested in the future and those found to have incorrectly certified themselves will be open to severe action from HMRC if discovered.
These changes affect the LDF process but they do not detract from its beneficial terms for those non-compliant individuals who wish to put undisclosed matters right. The amount of tax payable under a LDF settlement should invariably be significantly less than would be the case under both the Swiss agreement and the normal HMRC enquiry process.
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