Liechtenstein Disclosure Facility

Author:Mr James Norman
Profession:Hawksford Group

We've recently been seeing an increase in work using the Liechtenstein Disclosure Facility (LDF), which we believe could be useful for a wide range of clients and for a variety of reasons.

What is the LDF?

The Liechtenstein Disclosure Facility (LDF) was negotiated between HMRC and the Liechtenstein authorities and is in all but name, a tax amnesty. It is open to all UK residents whether domiciled or non-domiciled with undeclared offshore liabilities and in respect of assets anywhere in the world. There need not be a pre-existing link with Liechtenstein as the necessary link can be simply created.

Advantages of the LDF

Advantages include the maximum penalty being fixed at 10% of the outstanding tax plus interest, which is extremely favourable compared with an involuntary tax investigation where HMRC may seek a minimum 30% rising to 100%. Other advantages are immunity from prosecution where full disclosure is given (and providing funds do not come from wider tax fraud or criminal activity), the option of using a single composite rate of 40% or to calculate actual liability on an annual basis, and above all, clarity, certainty and peace of mind.

Who can benefit?

To take advantage of the LDF a number of criteria must be fulfilled but one of the main requirements is to have a 'meaningful relationship' with a Liechtenstein financial intermediary. The most common form of 'meaningful relationship' is a transfer of assets...

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