An Overview on the Liechtenstein Disclosure Facility (LDF)

The Liechtenstein Disclosure Facility is an agreement between the Principality of the Liechtenstein and the HM Revenue and Customs (HMRC). The document was finalized in August 2009.

The LDF provides UK tax payers who hold undeclared funds typically held in offshore bank or custody accounts with an opportunity to regularize their tax affairs on extremely favourable terms. The LDF is designed to provide a straight forward process to become tax compliant. In contrast to this, solutions like the withdrawal tax regulation between UK and Switzerland only partially address the needs of clients with globally diversified wealth.

Key advantages of the Liechtenstein Disclosure Facility:

  • Comprehensive facility to regularize tax affairs for UK tax payers
  • The period of enquiry commences April 1999 (the usual look back period is 20 years and in the case of Inheritance Tax it is unlimited).
  • A penalty of just 10% on the tax due (notably HMRC now have the power to impose penalties on unpaid tax of up to 200%).
  • An option to calculate and pay the actual tax due using a simple 40% composite rate.
  • Guarantee of no criminal prosecution and no naming and shaming.
  • Possibility to contact HMRC on a “no names” basis to talk through the issues.
  • If the records are incomplete, HMRC may be prepared to accept a reasonable offer for the payment of tax based on estimated figures.
  • There is no requirement to repatriate the funds after the LDF has been completed.