Peter Carnell, consultant at Sovereign Group, said he was “surprised” that the LDF has so far raised just £1bn in regularised tax across 5982 declarations, since it opened in August 2009.
If the facility continues to receive declarations at the current average size of £161,000, Carnell said it will require a total of 12,000 new cases by its March 2016 closure date to meet the Revenue’s target.
“The only other solution is for the average yield per case to increase dramatically,” he said. “Perhaps the real big sums have yet to move.”
“I have been very surprised at the facility’s low uptake to date; the LDF covers assets from all over the world and offers immunity from prosecution, both making it far more attractive than any other disclosure agreements on offer,” he added.
He said that HMRC must strengthen its communication of the advantages of the facility if it is to meet its target.
“We have seen people come out nice and clean with no naming and shaming or prosecutions. If I was HMRC, I would have expected to have at least 20,000 registrations.”
The LDF is an agreement between Liechtenstein and HMRC designed to give UK taxpayers with undeclared funds held in offshore bank or custody accounts with an opportunity to regularise their tax affairs on favourable grounds.
“Significantly short”
Those with undeclared funds will receive a penalty of just 10% on any tax due and a guaranteed immunity from prosecution.
To make use of the LDF, an investor must link at least 20% of their assets to a Liechtenstein-based financial institution.
Investors are also given an option to contact HMRC on a “no-names” basis to discuss their funds, and are not required to repatriate their funds after the facility has closed.
In April, UK law firm Irwin Mitchell said HMRC was “likely to fall significantly short of its £3bn target,” because there was unlikely to be a surge in new cases before its closure date.
In its statement at the time, the company added: “The original yield target for the LDF was set at £1bn, and although this was later increased by HMRC to £3bn, the revenue generated stands at only £914m.
“Based on HMRC’s figures, and the likely number of new resignations, we predict the LDF yield may be less than £1.4bn by the time it closes on new cases.”
