A new information exchange agreement between the UK and other countries was signed in May 2014, including Switzerland. The Liechtenstein Disclosure Facility (LDF) is an agreement between the governments of Liechtenstein and the United Kingdom that allows British citizens to declare undisclosed assets to Her Majesty`s income and rights (HMRC). The LDF, which came into force on September 1, 2009, is supposed to be a proactive initiative that encourages individuals to voluntarily take care of their affairs. The scheme offers more favourable conditions than other tax surveys: members are generally fined 10% instead of 100%, with interest and tax penalties only to be claimed for the previous ten years and not for the previous 20 years. The details of the LDF are presented in a “Memorandum of Understanding” between the Liechtenstein authorities and HMRC. Under the agreement, Liechtenstein`s banks and other financial intermediaries are required to identify “persons concerned” (i.e. accounts with UK addresses that may have UK tax debt) and contact them through their tax affairs. These “concerned persons” must then register with HMRC to use the FLA and submit a certificate to their financial institution.  For people who are already active in Liechtenstein or who create a “footprint” in the country, disclosure may be voluntary without prior contact with a financial institution. This means that people who have unreported assets in another offshore jurisdiction can bring this account under the terms of the LDF by opening a new account in Liechtenstein.  Once registered in the FLA, a person has up to 10 months to complete their disclosure to HMRC.
Tax obligations declared under the FLA must cover only the period following April 6, 1999 and not the standard 20-year tax period. In addition, as part of a tax investigation, a person could be subject to 20 years of tax, plus interest, a possible 100 per cent penalty or criminal prosecution. However, under the FLA, there is usually only a 10% fine and assurances that no criminal investigation will be opened.  How does it work? If you meet the above criteria, you will need an asset in Liechtenstein. If you don`t have one yet, you can open a bank account in Liechtenstein.B. Although we cannot provide you with financial advice, we can contact you with Liechtenstein bankers. You must then register with the FLA, and once you have accepted it, there is a specific time frame within which you can make your disclosure to HMRC, during which the amount of tax due is set. Payment of the amounts due (taxes, interest and penalties) is necessary at the time of publication, unless other agreements are concluded.
Dr Ariel Sergio Goekmen of Kaiser Partner Privatbank AG compared the benefits of LDF to the Uk-Swiss tax treaty in STEP magazine. He writes: “It appears that the tax planning and accounting industry believes that LDF is currently the best, and probably the cheapest, route for those concerned who want to settle their tax affairs and regain full control of the underlying assets.” He notes that LDF`s success is due to the fact that it is structured, secure, can be implemented very quickly and can be used to regain control of globally diversified assets.  The Liechtenstein Disclosure Facility (LDF) was announced on 11 August 2009 under a landmark agreement between the United Kingdom and Liechtenstein.