The Liechtenstein Disclosure Facility (LDF) is a ground breaking tax agreement between the UK HM Revenue & Customs (HMRC) and the Government of Liechtenstein which will ensure that the right tax is paid to the UK by those with investments in the Principality.
The LDF is a unique but time-limited opportunity to declare previously hidden tax liabilities so it is important to act quickly. As at 30 September 2011 - 1721 have come forward.
A number of improvements to the Memorandum of Understanding have been agreed between the Liechtenstein Government and HMRC which will make the Agreement more transparent and easier to use.
1. The New “Confirmation of Relevance” to Simplify the LDF Registration Process
One of the conditions for using the (LDF) in order to disclose unpaid tax is that you must already own or acquire qualifying assets in Liechtenstein, but from 1 December 2011, UK taxpayers will need to provide HMRC with a simple Confirmation of Relevance (COR) to register.
The COR will be issued by the Liechtenstein financial intermediary as proof their UK clients has acquired a qualifying asset or established a connection with Liechtenstein’s financial centre. This will streamline the registration process, providing certainty as to what is needed.
2. Deadline for Notifications extended to 31 March 2012
Liechtenstein’s financial intermediaries are required to tell their UK clients they must meet their UK tax obligations. HMRC and Liechtenstein have agreed to a three month extension of the notification deadline to 31 March 2012 due to the complex steps in ensuring all UK residents affected are identified and the larger than anticipated number of people likely to receive a letter.
Katja Gey, Director of the Office of International Affairs, who led the work on the implementation of the MOU for the Government of Liechtenstein said:
“While virtually all of Liechtenstein’s financial intermediaries have completed their work in identifying those whose connections with the UK will result in their notification, this three month extension for formal notification will permit our intermediaries to establish the relevant beneficial interests and ensure that the entire process reflects the sympathetic and helpful approach HMRC and Liechtenstein are committed to.”
3. Self-Certification Option to Demonstrate UK Tax Compliance
HMRC and Liechtenstein, working closely with the Trustee and Bankers Associations have agreed a process which will enable some UK residents who are notified under the LDF to self certify in certain circumstances. This will reduce costs and simplify the process but is only available to those investors who can demonstrate they are tax compliant.