British savers could use Liechtenstein amnesty to disclose worldwide assets

08 July 2010

UK taxpayers can take advantage of the Liechtenstein Disclosure Facility just by moving a fraction of their undeclared offshore assets to Liechtenstein, say experts.

The LDF opened on 1 September 2009 and runs until 31 March 2015, covering income for the ten years up to and including the 2008/2009 year.

According to an HM Revenue & Customs statement, UK residents with offshore investments can use it merely by opening a bank account or acquiring an interest in an asset in Liechtenstein, at any time up to 31 March 2015.

Under Liechtenstein's new Law on Administrative Assistance in Tax Matters, Liechtenstein financial institutions now require British clients to disclose their tax liabilities to the UK government.

If the client uses the LDF to do this, he will then have to repay all unpaid tax going back to 1999, but the penalty payment will be capped at 10 per cent of the outstanding tax. Moreover, income received before April 1999 need not be declared under LDF, possibly saving a huge sum.

So there has been much speculation that British savers with large offshore assets might move them to Liechtenstein to take advantage of LDF.

But according to the journal International Adviser, Liechtenstein financial institutions will regard a client as eligible for LDF participation if merely a "meaningful" portion of the client's assets are held in Liechtenstein.

It is even possible that assets in, say, Switzerland  can be linked to Liechtenstein by setting up a new trust or foundation, or even an insurance bond, to act as a wrapper for the assets, without moving the assets themselves, says the journal.

In any case, the LDF is generally agreed by accountants to be a valuable route for British taxpayers to regularise their affairs.

Fiona Fernie, partner in the tax investigations team at BDO, says it gives UK residents "a huge opportunity to settle tax liabilities on offshore income or gains on better terms than any other HMRC offer", although BDO's research shows that few wealthy Britons know about it.

 

Sources

International Adviser

HMRC

Accountancy Age


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