The UK’s Liechtenstein Disclosure Facility (LDF) is now due to close on 31 December 2015, several months earlier than planned.

“If you hold offshore funds which are not declared and do not use the LDF, then you risk losing it all and potentially even more.”

The Summer Budget 2015 announced significant changes and any taxpayer who is uncertain as to whether their offshore structure is tax compliant or is unsure that all of the income and gains arising on offshore investments have been properly taxed, has a shorter window to review this. Consideration should be given to the merits of the LDF and its favourable terms.

From 1 January 2016 a revised disclosure facility will be offered by HMRC however the terms of this will be significantly less beneficial when compared to the LDF. So anyone not taking advantage of the LDF and waiting until 2016 is likely to face a higher settlement with HMRC next year and potentially not be afforded the benefits of immunity from prosecution which the LDF offers.

However, from 2017 onwards, once HMRC starts to receive information under UK FATCA or the Common Reporting Standard (CRS), no further disclosure facilities will be offered and the liabilities arising from settlements with HMRC will jump alarmingly. HMRC is already risk reviewing certain high-net-worth and ultra-high-net-worth taxpayers with a view to targeting them once the disclosure facilities come to an end. From HMRC’s perspective if someone hasn’t taken advantage of the LDF then that’s their problem and the gloves are off. Therefore expect higher settlements, naming and shaming and a rise in prosecutions for offshore related matters.

Now is the time for taxpayers and their offshore wealth professionals to ensure that structures are sound and that hidden tax charges do not lurk within. HMRC will be looking at areas such as ten year charges for trusts which have not been returned and undisclosed distributions to UK beneficiaries. The residence and domicile position of the settlor will also be under scrutiny so for taxpayers with skeletons in the cupboard the deadline is fast approaching.

For further information or if you have any questions in relation to this matter, please feel free to contact any member of the Tax Services team.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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