LIECHTENSTEIN DISCLOSURE FACILITY (LDF)

SUMMARY 

If you have any income or gains that were not properly declared to the UK tax authorities, we recommend you move all affected funds to Liechtenstein IMMEDIATELY and prepare a declaration to HMRC under the Liechtenstein Disclosure Facility (LDF). The LDF is available until March 2015, but the best results are achieved by prompt action.

The LDF’s method of operation is very generous, and here are summary points (which we would be happy to explain in more detail) of the main provisions: -

Income and gains arising prior to 5^th April 1999 are time-barred: there is no tax to pay

You can benefit from a “composite” method of computation which is unbelievably favourable: it concentrates on income and gains, thereby providing an effective shield from other taxes, including Inheritance Tax

The maximum HMRC level of penalty is 10% for periods up to and including 5^th April 2009

You benefit from effective banking secrecy until March 2015, if you establish a relationship with a Financial Intermediary in Liechtenstei

 The LDF helps create a clean pool of capital which can be repatriated to the UK, providing much needed peace of mind. 

 HMRC and the Government of Liechtenstein are promoting the LDF to UK accountants and lawyers in London on Wednesday 2^nd June. HMRC have also established a Help Desk in Liverpool to which Liechtenstein Financial Intermediaries and taxpayers will have exclusive access.

In summary, the LDF represents HMRC’s most ambitious attempt to narrow the UK’s £40bn “tax gap”[1][1].

If you are affected by this File Note, and wish to use the LDF straight away, please contact your AG Tax representative immediately. If you are affected and wish to find out more information in a manner that respects your requirement for complete secrecy, we recommend you contact HMRC’s Liechtenstein Help Desk on 0845 600 4680 or by letter to: -

HMRC Liechtenstein Team
7th Floor, The Triad
Stanley Road, Bootle
Merseyside L75 2EE

The Help Desk is manned with sympathetic and efficient staff, willing to give help and assistance on a “no names” basis.

BACKGROUND

The rest of this File Note provides some background to the LDF. Global undeclared money is estimated at $7trillion[2][2], of which one third is in Switzerland. Governments faced with cash shortages need access to these funds, and have obtained client information from current and former employees working for UBS[3][3], LGT[4][4], Credit Suisse and HSBC Private Bank. However, the use of intelligence services to obtain information in this way and the admissibility of such information in court are questioned by some.

HMRC recognises that much undeclared money exists for historic reasons, unconnected with the willingness to evade tax. For instance, between 1939 and 1945, many Jews were more interested in remaining alive than they were in submitting their annual income tax declarations by the due date.

HMRC signed a Memorandum of Understanding and a Tax Information Exchange Agreement with the Government of Liechtenstein in 2009. It is estimated that 15,000 LDF disclosures will be made by 2015.

CONCLUSION

We cannot anticipate the reaction this File Note will cause, but here is an attempt to deal with some of it: -

 If you are offended that we might be accusing any of our clients of tax evasion, then please accept our apologies. We make no such inference.

If you are incredulous that Liechtenstein, which once had a reputation for absolute financial toxicity, should have managed to achieve a friendly relationship with HMRC and to host conferences with HMRC, then so are we. A painting by Quentin Massys called “The Tax Collectors”[5][5] is a main exhibit of the Liechtenstein Museum’s art exhibition in Vienna, and portrays the mechanics of tax collecting in a somewhat unflattering light. However, there is no doubt that, for whatever reason, HMRC and Liechtenstein have become bed-fellows.

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