We've recently been seeing an increase in work using the Liechtenstein Disclosure Facility (LDF), which we believe could be useful for a wide range of clients and for a variety of reasons.

What is the LDF?

The Liechtenstein Disclosure Facility (LDF) was negotiated between HMRC and the Liechtenstein authorities and is in all but name, a tax amnesty. It is open to all UK residents whether domiciled or non-domiciled with undeclared offshore liabilities and in respect of assets anywhere in the world. There need not be a pre-existing link with Liechtenstein as the necessary link can be simply created.

Advantages of the LDF

Advantages include the maximum penalty being fixed at 10% of the outstanding tax plus interest, which is extremely favourable compared with an involuntary tax investigation where HMRC may seek a minimum 30% rising to 100%. Other advantages are immunity from prosecution where full disclosure is given (and providing funds do not come from wider tax fraud or criminal activity), the option of using a single composite rate of 40% or to calculate actual liability on an annual basis, and above all, clarity, certainty and peace of mind.

Who can benefit?

To take advantage of the LDF a number of criteria must be fulfilled but one of the main requirements is to have a 'meaningful relationship' with a Liechtenstein financial intermediary. The most common form of 'meaningful relationship' is a transfer of assets to a Liechtenstein bank account. This can be costly and clients are often concerned that the bank will then try to cross-sell them other products that they are not interested in. The route we recommend is to appoint a Liechtenstein trustee to hold the relevant assets on trust until the disclosure period is over. This will allow for greater flexibility to restructure affairs once the disclosure has been completed, as the assets under control can be repatriated anywhere as long as the trustee remains constant.

How can we help?

Hawksford has established a Liechtenstein based trustee company that is fully authorised and licenced by the Liechtenstein authorities. Our team in Switzerland comprise UK qualified private client lawyers and have inhouse accounting capability. They have extensive experience in the regulation of clients' affairs through the LDF and will be happy to discuss how this might benefit you or your clients.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.