Out-Law News 1 min. read
18 Mar 2015, 5:35 pm
The LDF allows those with UK tax irregularities to make a disclosure to HMRC on a voluntary basis in return for a reduced penalty in most years. In addition, the disclosures only need to extend back to April 1999, rather than the normal 20 year period. The LDF also offers immunity from prosecution and a single point of contact with HMRC.
Subject to conditions, anyone without an existing bank account, investment or structure in Liechtenstein can bring themselves within the LDF by acquiring a Liechtenstein bank account, before formally registering for the process.
Tax expert Fiona Fernie of Pinsent Masons the law firm behind Out-law.com, said: "In view of the announcement that legislation will be introduced to implement the common reporting standard, (CRS), which will give HMRC access to vast quantities of data in respect of taxpayers’ accounts offshore, it is more important than ever that taxpayers act now to regularise their tax affairs, since by closing the available current tax amnesties early, the chancellor has accelerated this ticking time bomb."
The Treasury also announced that the disclosure period for the Crown Dependencies Disclosure Facility is to be shorted and will end in December 2015, rather than September 2016. Like the LDF this facility offers taxpayers the opportunity to resolve their tax position with HMRC on favourable terms for those with money in one of the Crown Dependencies.
As a replacement the government will introduce a new tougher "last chance" disclosure facility that will be offered between 2016 and mid-2017, after existing disclosure facilities close. The new facility will include penalties of at least 30% in addition to tax owed and interest and will not guarantee immunity from criminal prosecution.
Fiona Fernie said that it was "unsurprising" that the "new facility gives no guarantee of immunity from prosecution and involves penalties which are more in line with HMRC’s normal civil penalty regime which are based on taxpayer behaviours".
However Fernie questioned whether "taking away the guarantee of immunity from prosecution for those who come forward could be counter-productive. How many people will think twice about disclosing if they could up end up behind bars?"
The government also announced new rules requiring financial intermediaries and tax advisers to notify their UK resident customers with UK or overseas accounts to explain the full impact of the Common Reporting Standard, the opportunities to disclose and the penalties they could face for non-disclosure. No announcement was made about when these new rules will be introduced.
Fernie said that these new requirements will mean "that those who do not take action will not be able to maintain that they were unaware of the disclosure facilities and will thus have no excuse for their inaction".