United Kingdom

Latest News on the LDF 

Latest News on the LDF

Confirmation of Relevance
As part of the registration process HMRC wish to see a Confirmation of Relevance.  This is issued by the Financial Intermediary in Liechtenstein to confirm that a meaningful relationship exists.

 

Per Article 3, Paragraph 3 of the UK TIEA a Financial Intermediary in Liechtenstein will require the following in order to be able to confirm a meaningful relationship via the Confirmation of Relevance:

 

  • 20% of the client's offshore bankable assets (funds that will be registered for the disclosure program) unless the amount is CHF 3 million when the percentage is no longer relevant, or 
  • a legal entity is founded or formed in Liechtenstein or a trust is managed by at least one trustee in Liechtenstein and at least 10 per cent of their assets or a minimum of CHF1 million (whichever is the lower amount) are in an account of the legal entity or trust with a Liechtenstein bank, or
  • a foreign legal entity is managed mainly by a Board of Directors in Liechtenstein and at least 15 per cent of their assets or a minimum of CHF1 million (whichever is the lower amount) are in a Liechtenstein bank account in the name of this legal entity, or
  • an insurance policy with a minimum premium of CHF150,000 issued by a Liechtenstein insurance company.

Increased penalties for offshore non-compliance

From 6 April 2011 penalties for offshore non-compliance - for income tax and capital gains tax - will be linked to the tax transparency of the country involved. There will be increased penalties in place for under-declared income and gains from territories which do not automatically share tax information with the UK.  The new penalties classify territories into three groups, which determine what level of penalty will apply for non-compliance.  Penalties will be 100%, 150% or 200% of the amount they would be now. 

 

More information on increased penalties for offshore non-compliance can be found on HMRC's website.

 

Liechtenstein Financial Intermediaries have written to UK clients
Law was passed in Liechtenstein on 30 June 2010 which implements the agreement of 11 August 2009 between Liechtenstein and the UK, and also the Memorandum of Understanding of 11 August 2009 between the Liechtenstein Government and HMRC. Amongst other things it brings into force, from 1 September 2010, the identification of UK connected persons who have held assets in Liechtenstein at 1 August 2009 or anytime thereafter.  Financial Intermediaries in Liechtenstein had a legal requirement to identify such UK persons by 1 October 2011. UK persons identified should have been contacted by the Financial Intermediaries before the revised deadline of 31 March 2012.  The UK person then had 18 months to satisfy the Financial Intermediary they:

 

  • had registered for the LDF; or
  • do not have to pay tax in the UK; or
  • had already fully complied with UK tax obligations.

 

Double Taxation Agreement UK / Liechtenstein 

In June 2012 the UK and Liechtenstein announced they had signed a comprehensive double taxation agreement (DTA).  The DTA is expected to take effect from 1 January 2013.  The DTA supplements the tax information exchange agreement (TIEA) which was signed on 11 August 2009 and which remains in force. 

 
Serious fraud investigations by HMRC
HMRC has received information from a diverse range of sources regarding people with undisclosed assets, in particular, as a result of production orders against UK banks in 2008 and data theft from overseas banks.  In September 2010 HMRC moved into a more proactive mode and started to process the information which it had received.   It opened a number of investigations in relation to serious fraud (Code of Practice 9) which precludes the target from using the Liechtenstein Disclosure Facility (LDF) and securing the unique benefits which it offers. From November 2011 more than 3,000 account holders are being contacted by HMRC.

  
UK spending review
As part of the UK spending review, in October 2010  the UK tax authorities announced that £900million of savings will be recycled into additional work against tax avoidance, evasion and criminal attack with a view to raising extra tax revenue of £7billion a year by 2014/15.  This will include the creation of a new dedicated team of investigators to increase the pressure on those with undeclared assets held offshore including a fivefold increase in the number of criminal prosecutions.  A prosecution also precludes the target from using the LDF. 

 
KPMG comment
In the light of the above many people with undeclared assets may now wish to review their position.  The LDF provides an opportunity for UK residents to regularise their tax affairs on unique and favourable terms and will remain available until 31 March 2016.

Contact

Please call our helpline on 0800 970 9690 for a free no obligation discussion. Alternatively, please contact Derek Scott on derek.h.scott@kpmg.co.uk or 020 7311 2618.