Liechtenstein Disclosure Facility (LDF)

The LDF offers a very favourable way to disclose offshore tax liabilities compared to previous tax amnesties or a tax investigation by HM Revenue & Customs (HMRC).

HMRC and the Liechtenstein Government made a formal agreement during 2009 for individuals, or companies, with Liechtenstein assets to disclose previously untaxed liabilities in the UK.

With HMRC's new information powers and more sophisticated information gathering techniques, a tax investigation could expose a taxpayer to 20 years of back taxes plus interest and currently, a potential 100% penalty, or worse, criminal prosecution. The LDF represents an ideal opportunity to address the issue in a cost effective and efficient manner.

The key benefits of the LDF are:

• 10% penalty in most cases (HMRC may seek a minimum 30% rising to 100% in a tax investigation)
• limit back taxes to 6 April 1999 instead of 20 years
• assurance of no criminal tax proceedings in cases where full disclosure is given, and the source of the funds do not relate to wider criminality or tax fraud such as VAT carousel fraud ('Missing Trader Intra-Community', or MTIC)
• disclosure can be calculated using a 'Composite Rate Option' (CRO), The CRO is a flat rate of 40% applied to all income and gains. This could help if Inheritance Tax or National Insurance is due

The LDF expires on 31 March 2015.

The LDF allows the taxpayer to establish a Liechtenstein based asset in order to become a 'relevant person'. Therefore, taxpayers with liabilities relating to assets based in other offshore jurisdictions may be able to benefit from the above preferential terms.

In addition, the CRO can offer significant savings to those individuals who have inherited assets that were not included within the deceased's estate or those companies exposed to a whole raft of taxes.

2015 may seem like a long way away but Liechtenstein asset providers will start writing to the owners. Also, the longer one waits before making a disclosure the greater the risk of HMRC starting a tax investigation first.

How can Grant Thornton help?

Grant Thornton's National Tax Investigations team can assist with historic and current tax problems in the most efficient manner possible. After an initial fee-free meeting, our team will be able to identify the key issues, areas of potential risk and offer a proposed way forward.

In addition, the team will be able to assess whether:

• a disclosure is necessary and if so,
• whether you would meet the qualifying criteria for the LDF and
• whether you could become a 'relevant person' for this purpose.

Where a disclosure to HMRC is required and the LDF is not viewed as the best route, the team can advise the best approach to HMRC to ensure your affairs are correctly dealt with and you are sufficiently protected.

Our team includes former senior HMRC Inspectors and specialist professionals dealing with all aspects of tax and dispute resolution. We have successfully assisted taxpayers with disclosures to HMRC under the LDF and helped hundreds of individuals and businesses with other 'tax amnesties'. Most recently the New Disclosure Opportunity (NDO) and in 2007 the Offshore Disclosure Facility (ODF). The team is also experienced in the defence of criminal prosecutions, civil investigations into cases of suspected serious fraud (under Code of Practice 9), complex tax avoidance arrangements (under Code of Practice 8) and local district enquiries. Grant Thornton's National Tax Investigations team is well placed to provide advice and support to all taxpayers.

The LDF can be complex. Grant Thornton has direct access to HMRC's specialist LDF team and experience of cost effectively managing the potential exposure to tax relating to offshore structures We offer an unparalleled level of technical expertise as well as 'value for money' solutions to sometimes daunting problems.

A member of our team would be very happy to have an initial, free, no obligation, discussion about any concerns you may have.