Tax

Many Users Of Liechtenstein Disclosure Already Under UK Scrutiny - Law Firm

Tom Burroughes Group Editor London 19 November 2015

Many Users Of Liechtenstein Disclosure Already Under UK Scrutiny - Law Firm

A large chunk of UK taxpayers using a facility set up with the tiny European state to regularise their accounts had already been under investigation by UK authorities, a law firm says.

Around 40 per cent of UK taxpayers using the Liechtenstein Disclosure Facility were prompted into coming clean about their accounts after the UK tax authority started to check their cases, Pinsent Masons, the law firm, says. 

Around 800 of the 2,000 LDF disclosures that the law firm said it is aware of happened as a result of existing HM Revenue & Customs enquiries that encouraged those involved to declare their unpaid tax liabilities through the facility.

Asked about the source of its information by WealthBriefing, Pinsent Masons said it drew the findings from 2,000 cases it had either worked on, or was aware of. 

This publication contacted HMRC about the Pinsent Masons figures; the organisation did not comment.

The LDF, stemming from a pact between the UK and Liechtenstein in August 2009, has, after a number of timetable adjustments, been given a termination date of end-December this year. It allows individuals, companies or other entities such as trusts to regularise their UK tax affairs. They can draw a line under such matters by paying a 10 per cent fixed penalty rather than up to 200 per cent on the unpaid liabilities for periods to 5 April 2009, and the look-back period only goes as far as 1999. The facility is available to those with offshore undeclared tax as of 2009 who establish what is, or has been, an appropriate connection to Liechtenstein. The taxpayer must not be under an existing investigation. 

The LDF has been cited as one of the more efficient and workable disclosure pacts.

Pinsent Masons said in a commentary that almost one in five persons using the facility had no overseas assets but used it to declare irregularities in their UK tax affairs.

The penalty due on unpaid tax declared through the LDF can be as low as 10 per cent of all tax due, which is far lower than the standard penalties that HMRC can impose. Of the cases reviewed by Pinsent Masons, 30 per cent were settled for over £500,000 ($760,950), and approximately 25 per cent were settled for under £100,000.

“The LDF has given anyone that has evaded UK tax an unparalleled opportunity to put matters straight. It has truly presented a `Get out of Jail’ card to anyone wishing to correct their tax affairs,” Paul Noble, director director at Pinsent Masons, said.

“Time is running out, there will be plenty of people with substantial unpaid tax liabilities who will not come forward and use the benefits of the LDF. They need to be aware that they are running the risk of prosecution which can have far more serious implications for them," he added. 
 

 

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