More than 2,400 people have registered to disclose unpaid tax under the Liechtenstein Disclosure Facility (LDF) with £363 million already paid in tax bills, according to HM Revenue and Customs (HMRC).
The Liechtenstein Disclosure Facility (LDF) was signed in August 2009 and was originally scheduled to run from 1 September 2009 to 31 March 2015. It has since been extended to 5 April 2016. The yield of £363 million is made up of £296 million generated from settled cases and £67 million paid in cases not yet settled.
The agreement allows investors in Liechtenstein who are liable to UK tax to legitimise their tax affairs for the past and ensure they are tax-compliant for the future. It is underpinned by a tax information exchange agreement, signed in August 2009, and by special legislation in Liechtenstein.
Based on current figures, the LDF is now expected to bring in up to £3 billion by 2016. The figures were released as the United Kingdom and the Principality of Liechtenstein prepared to sign a double taxation agreement (DTA), the first between the two countries.
At the same time, the UK and the Principality of Liechtenstein will sign a third Joint Declaration on the Memorandum of Understanding (MOU) on cooperation in tax matters. This further clarifies the Liechtenstein Disclosure Facility [HMRC] and the Taxpayer Assistance and Compliance Programme [Liechtenstein] arrangements between the parties. It makes available a Single Charge Rate of 50 per cent that Liechtenstein investors might apply to calculate undisclosed UK tax liabilities for the tax year 2010/11.
Dave Hartnett, Permanent Secretary for Tax at HMRC, said the third Joint Declaration recognises the overwhelming success of the LDF.
"HMRC originally estimated the number of people who would register for the disclosure facility at 2,000, and that it would probably produce £1 billion. In light of the ongoing success of the LDF we now anticipate the arrangements will produce up to £3 billion from a much larger number of people.”
The Exchequer Secretary, David Gauke, reiterated that the government is determined to clamp down on tax avoidance at home and abroad.
"The UK has the largest tax treaty network in the world but, until now, Liechtenstein was the only country in the European Economic Area we had no agreement with. This new treaty and the existing disclosure facility show that the net is closing on those who try to evade their UK tax liabilities by using offshore structures - there are fewer and fewer places to hide.”
Parliament is expected to ratify the agreement this year, so it can take effect from 1 January 2013
More than £167,000 raised
Beware ‘temporary’ vulnerability
Partner Insight: A renewed focus on 'knowledge-intensive' companies should help investors realise that these entrepreneurial companies are found in sectors other than biotech or technology.
Celtic WM and Active Wealth