In the context of a recent Tax Information Exchange Agreement signed between the UK and Liechtenstein, a memorandum of understanding has been finalised between the respective authorities. This will permit UK taxpayers to regularise their affairs where untaxed funds can be linked to investments or assets in Liechtenstein.
The LDF will run from 1 September 2009 until 31 March 2015, and requires registration with HMRC. This special disclosure facility will limit the penalty and the applicable period of assessment and will offer a composite rate in certain defined circumstances. Broadly speaking, penalties could be limited to 10% in respect of liabilities arising in the years of assessment after 1999, and tax calculated on a composite rate of 40%. Taxpayers already under investigation by HMRC in relation to undisclosed offshore funds will apparently not be able to avail of the LDF.
More complete details are available in the memorandum of understanding published on the HMRC website at http://www.hmrc.gov.uk/international/mou-lich.pdf.