In the wake of public outcry regarding tax avoidance through offshore accounts, local accountancy firm BDO LLP is strongly advising individuals to disclose their dealings now, under the HMRC’s Liechtenstein Disclosure Facility (LDF), to avoid criminal proceedings.
The LDF covers all entities that are ‘formed, founded, settled, incorporated, administered or managed in Liechtenstein’ however, those with monies elsewhere in the world can benefit from the LDF, if they make a financial footprint into the Principality before September 1st 2012.
Tax Partner at BDO LLP in Southampton, Andrew Lines warns, ‘from September this year, it will become more difficult for those who do not already have a connection with Liechtenstein to get a financial foothold in the country in order to avail themselves of the LDF, as the amount of money required to do so will be far more substantial.’
Persons who have entities within Liechtenstein and who make their disclosures under the LDF will be extended favourable terms, including amnesty for pre-April 1999 taxes, a fixed 10% penalty and immunity from prosecution.
The Liechtenstein Disclosure Facility was agreed in 2009 between the UK and Liechtenstein governments, in a bid to prevent tax avoidance and give people an opportunity to declare their overseas interests without facing prosecution.
Explaining how the LDF will give partial amnesty to tax avoiders, Andrew said, ‘under the agreement, any UK resident, both domiciled and non-domiciled, will be given partial amnesty if they disclose their offshore dealings before 5 April 2016.’
‘Only unpaid taxes from 6 April 1999 will be payable, compared with the normal statutory time limit of 20 years,’ he added, saying that participants will qualify for a fixed penalty of 10% of the tax due, compared to the maximum penalties of up to 100%.
The LDF process is more involved than other disclosure opportunities and will need careful consideration.
‘We are currently helping a number of people under the terms of the LDF to ensure a full disclosure is made and managed properly.’ Andrew said, adding that all cases are managed under a ‘bespoke service’ set up by HMRC and that BDO LLP are overseeing tax disclosures involving the Specialist Investigations Unit within HMRC.
Further information and advice about tax disclosures can be obtained by contacting Andrew Lines at BDO LLP in Southampton.