The LDF is a unique opportunity offered by HM Revenue & Customs (HMRC) for taxpayers with undisclosed offshore accounts to regularise their tax affairs up to the end of the last filed tax year.
The LDF has had especially favourable outcomes in circumstances where:
- the taxpayer has an undisclosed offshore bank account that they would like to disclose
- the taxpayer has inherited offshore monies that were not originally included in the deceased's estate
- the taxpayer has a Swiss bank account and needs to become UK tax compliant
- the taxpayer is UK resident but non-UK domiciled and has not yet disclosed their offshore assets.
Suitable cases are not restricted to those listed above. You should be thinking about what the LDF can do for you if:
- you had an offshore bank account at 1 September 2009 that was not opened by a UK branch, and
- you are not being investigated by HMRC for fraud, and
- you have historic unpaid taxes.
- Restriction of assessable years back to 1999 only. HMRC will assess 20 years in cases of deliberate omission of taxes under normal circumstances
- Restriction of the chargeable penalty to 10% up to tax year 2008/09, 20%+ for 2009/10 and 2010/11 and 20% for 2011/12. In usual circumstances HMRC will seek a 30 - 100% penalty for deliberate omissions and new legislation allows HMRC to charge a 200% penalty of taxes underpaid where an offshore bank account is held in certain jurisdictions after April 2011
- Assurance that criminal tax proceedings will not be pursued in cases where full disclosure is given and the source of funds do not relate to wider criminality or wider VAT carousel fraud. Disclosures made outside the LDF carry no such assurance
- Liabilities can potentially be calculated using favourable terms, meaning that, for example, where liabilities could arise under several heads of tax, such as income tax and inheritance tax, there is an opportunity to ensure that only income tax is payable at 40%
- In the vast majority of cases the tax, interest and penalty under the LDF are much lower than the withholding tax arrangements proposed under the UK-Switzerland agreement
- The disclosure procedure is streamlined to make the process the least intrusive and most efficient disclosure mechanism operated by HMRC to date
- The process can be used to achieve clarity on relevant tax matters, such as domicile, which can have favourable consequences for the taxpayer going forward.
How can Grant Thornton help?
At Grant Thornton we have specialists in our National Tax Investigations team who have been resolving tax issues through the LDF since it was launched in 2009. We are happy to meet with you for a consultation to identify the key issues and let you know if the LDF is right for you.
We offer an unparalleled level of technical expertise as well as 'value for money' solutions. A member of our team would be very happy to have a no fee, no obligation discussion about the concerns you may have. Call us on 0845 868 2050 today.