Liechtenstein Disclosure Facility to close on 31 December 2015

October 26, 2015

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HMRC's Liechtenstein Disclosure Facility (LDF) is due to close on 31 December 2015. Non-compliant UK taxpayers therefore have less than ten weeks to register formally with HMRC to use the facility.

The LDF gives UK taxpayers the opportunity to disclose any historic untaxed offshore income or gains to HMRC. For those eligible for the full beneficial terms, the LDF is usually the most cost-effective way to bring their historic tax affairs up-to-date. The benefits of the LDF include low fixed penalty rates, the fact that undisclosed tax is only paid from 6 April 1999 onwards (rather than the normal 20 years), immunity from prosecution for tax-related offences, and a comparatively quick and efficient process which doesn't require that the taxpayer meets with HMRC.

Since its introduction in September 2009, more than 6,000 cases have been settled with HMRC using the LDF, yielding over £1bn to date. PwC has assisted in almost 1,000 of these cases. In our experience, supported by recent HMRC research, many taxpayers with complex affairs may not realise that they're non-compliant. This is particularly the case with UK non-domiciled individuals, or where offshore trust or company structures have been used.

Download HMRC Research Report - Offshore Disclosure

Over 90 countries are signed up to share information automatically about the overseas financial affairs of UK residents with HMRC, with the first information due to be exchanged in 2016. Alongside this move to greater cross-border tax transparency, the UK Government is currently consulting on the introduction of a 'strict liability' criminal offence applicable to UK taxpayers who fail to declare offshore financial information.

In January 2016 the LDF will be replaced by a final worldwide disclosure facility, and HMRC has stated publically that those not taking the opportunity to come forward will be caught and face tougher sanctions, both criminal and civil.

Download PwC LDF client guide