UK- Liechtenstein Disclosure opportunity
On the same day that the UK signed a Tax Information Exchange Agreement with Liechtenstein a further agreement was also signed following Liechtenstein’s commitment to ensure that their strict bank privacy laws are not used to assist UK taxpayers to evade UK taxes.
This new agreement is expected to encourage UK taxpayers with investments in Liechtenstein which have not been taxed to make a full disclosure to HMRC. This agreement known as Liechtenstein Disclosure Facility (LDF) will allow penalties on unpaid tax to be capped at 10% of tax evaded over the last ten years. In this respect it is the same as the main ‘New Disclosure Opportunity’ (NDO).
Like the NDO, the LDF will commence on 1 September 2009 and run until 31 March 2015. Both HMRC and the Liechtenstein authorities expect that by the end of this period all UK taxpayers with Liechtenstein investments will be fully tax compliant.
Any UK taxpayers who do not make full disclosures by the end of the programme will find their accounts in Liechtenstein closed down as well as face penalties of up to 100% of unpaid taxes.