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Moves have been made to make the UK’s longest-running tax ‘amnesty’ transparent and streamlined, with HMRC and the Liechtenstein government agreeing improvements to the memorandum of understanding of the Liechtenstein disclosure facility (LDF).
The initiative will close on 31 March 2015, having been launched on 1 September 2009. One its conditions of use to disclose unpaid tax without risk of severe penalties is that the individual owns qualifying assets in the alpine principality.
The change to the memorandum means taxpayers now need only to provide the Revenue with a confirmation of relevance (COR) certificate – which will issued by Liechtenstein financial intermediaries as proof their clients have a qualifying asset or have established a connection with the country’s financial centre.
The upgrades to enhance the LDF’s ease of use also mean the deadline for intermediaries to write to UK clients to remind them to meet their tax obligations has been extended to 31 March 2012 (from 31 December 2011) to ensure all affected individuals are identified and notified.
HMRC and the Liechtenstein administration have worked with trustee and bankers associations to enable some UK residents to self-certify: a measure that is expected to reduce costs and simplify the LDF process but will be available only to investors who can demonstrate they are tax compliant.
The new notification deadline is ‘totally sensible’, said tax investigations specialist John Cassidy, and it will be particularly helpful where Liechtenstein institutions have delayed contact with their UK clients because they wanted to see the terms of the new UK-Swiss tax deal first.
The other upgrades to the LDF’s memorandum of understanding received criticism from Mr Cassidy, a partner at PKF, who said the introduction of the COR certificate would ‘add another layer of administration and slow down the process’ for individuals who have long held assets in Liechtenstein.
He said the self-certification option was theoretically a good idea but in practice may be difficult for lay taxpayers to be sure they have met all their obligations without consulting a professional adviser.
