Facility face-off

A UK resident has been the beneficiary of a Liechtenstein trust for more than 20 years. The distributions had not been entered on a UK income tax return although there were some mitigating circumstances.

In 2007 this omission was corrected by making a full disclosure to HMRC under the offshore disclosure facility (ODF).

A settlement of £102 000 was paid comprising: income tax due 1987/88 to 2005/06 (19 years) of £57 000; a 10% penalty of £6 000; and interest of £39 000.

In the guidance booklet DS101 (March 2007) it was stated that after the ODF ended on 22 June 2007 HMRC would seek ‘higher penalties’ on any additional tax due on overseas income.

In November 2009 HMRC agreed a memorandum of understanding with the government of Liechtenstein and offered a five-year compliance programme where the Liechtenstein disclosure facility (LDF) became available to UK taxpayers who...