Since 2009, the LDF has offered savers immunity from higher tax charges and with a looming deadline, law firm Pinsent Masons has warned people to get their tax affairs in order proactively or risk the less favourable terms to follow.
After 31 December, a tougher ‘last chance’ disclosure facility will take effect, with higher tax penalties and no guarantees of immunity from prosecution. It is expected to last from 2016 to mid-2017.
Pinsent Masons said around 800 of its known 2,000 LDF disclosures were only made following prompts by HM Revenue & Customs during enquiries on other unrelated issues.
Offers immunity
The LDF was originally set up for UK taxpayers to declare underpaid tax due on assets held in Liechtenstein but it has been used increasingly by UK taxpayers to declare unpaid tax due on assets held in the UK or globally.
Charges on unpaid tax declared through the facility could be as low as 10% – far lower than the standard tax charges put in place by HM Revenue & Customs. It also offers immunity from prosecution for tax-related offences.
Pinsent Masons said almost one in five using the LDF had no overseas assets, rather the loophole to declare irregularities in their UK tax affairs.
Further, almost a quarter of the disclosures related to issues involved assets inherited from other family members.
Unparalleled
Paul Noble, tax director at Pinsent Masons said: “The LDF has given anyone that has evaded UK tax an unparalleled opportunity to put matters straight. It has truly presented a ‘get out of jail’ card to anyone wishing to correct their tax affairs.”
It is not just for the more complex tax scenarios. Noble suggested anyone confused by cross-border tax affairs might benefit from the facility.
Time is running out
“Time is running out, there will be plenty of people with substantial unpaid tax liabilities who will not come forward and use the benefits of the LDF. They need to be aware that they are running the risk of prosecution which can have far more serious implications for them.”
