The new rules which come into force after the Liechtenstein Disclosure Facility (LDF) closes on 31 December provide for automatic exchange of information between the governments of the UK, US, EU member states and certain non-EU countries.
Any financial accounts existing on 31 December 2015 held by non-residents will be subject to due diligence procedures, while any non-residents opening accounts after that date will be required to self-certify.
This exchange of information is part of ongoing international efforts to combat offshore tax evasion.
Broadly successful
Mark Davies, managing director and founder of Mark Davies & Associates, said: “The LDF was set up to encourage people in this position to come forward without paying the full penalties, and it has been broadly successful, raising over £1bn ($1.5bn, €1.37bn) in unpaid tax. The introduction of the Common Reporting Standard will mean that HMRC has that information and no doubt it will act on it swiftly. We will most likely see a considerable spike in penalties.”
He added that to be eligible for the LDF it is necessary to have a relevant connection with Liechtenstein, such as a bank deposit, before application can be made.
“It requires time to open an account and transfer monies across and, as the 31 December is a bank holiday in Liechtenstein, applicants will need to submit their application forms next week to have any chance of getting a certificate of eligibility in time.”
People coming forward
Another tax expert John Cassidy, tax Investigations partner at Crowe Clark Whitehill, said: “Even now, with all the facilities about to close, we are seeing people coming forward with potential disclosures. Anyone with income or assets abroad, including a small bank account, needs to be aware of their tax position and act quickly.
“Anyone with income or gains linked to assets abroad, including a foreign bank account or property, needs to be aware of their tax position and should seek specialist advice about their options before it is too late.”
Those with undeclared bank accounts have only a few days left to register under the LDF. After that it will be too late, and they may find themselves facing investigation by HMRC.
