HMRC´s Disclosure Facility for Liechtenstein (LDF)

On 11 August 2009, HMRC reached an agreement with the Liechtenstein Government to establish the LDF program, providing the most favourable process that allows UK taxpayers to clear up their past-due UK tax liabilities.

UK taxpayers will have the option of paying their liabilities by calculating them at a single composite rate of 40% on the income with limited deductions or reliefs (if any) or of calculating their actual liability under normal UK tax rules.

The Agreement contains the following features:

• a penalty of 10% (or no penalty in the case of innocent error);
• assurance against criminal investigations in cases of full, accurate and unprompted disclosures;
• possibility to contact HMRC anonymously via a professional adviser or a financial intermediary such as Kaiser Ritter Partner to estimate tax results;
• HMRC will accept reasonable offers for the payment of the tax based on estimated liability;
• exclusion of the UK taxpayer from the “naming and shaming” procedure announced by HMRC in April 2009 (applicable where the deliberately unpaid tax is more than £25,000).

The LDF ends on 31 March 2015. Until then, financial intermediaries such as Kaiser Ritter Partner must identify and notify certain UK clients with assets and interests in Liechtenstein and receive proof of their UK tax compliance with respect to such Liechtenstein assets within a certain period of time (generally between about 18 and 30 months).