UK: Liechtenstein Disclosure Facility

Last Updated: 20 July 2015
Article by UHY Hacker Young LLP

With HMRC entering into a long succession of information exchange agreements, the chances of the tax man finding out about your offshore assets - whether in Liechtenstein, Switzerland or anywhere else - is now extremely high. When you are found out, HMRC can be expected to come down hard with significant penalties and criminal prosecution a very real possibility. If you have undeclared UK tax liabilities you have two choices: to wait until your turn comes (and it will come) or to get in first with a disclosure of relevant income and gains. If you are going to disclose, it usually makes sense to take advantage of the very generous terms of the Liechtenstein Disclosure Facility (LDF).


The LDF is the result of an agreement between the UK and Liechtenstein governments aimed at 'cleaning up' Liechtenstein's reputation as a haven for tax evaders. Despite the name, however, the LDF is open to almost anyone with undeclared tax liabilities associated with any offshore assets. All that is needed is that you establish a 'meaningful relationship' with a Liechtenstein financial intermediary (see below).

The LDF goes a good deal further than previous tax 'amnesties' and it is generous to an extent that is unlikely ever to be repeated. Key features are:

  • A fixed starting point: no looking back at periods prior to April 1999.
  • Penalties capped at 10% for periods up to 2008/9 (with no penalty at all in cases of 'innocent error').
  • Guaranteed immunity from criminal prosecution for tax offences in return for full, accurate, and unprompted disclosure.
  • A streamlined and assisted process aimed at getting your affairs in order, including an HMRC helpdesk comprised of dedicated experts who will provide assistance with disclosures on an anonymous basis if desired.
  • A composite rate option for years up to 2008/9 under which liabilities to various taxes can be covered by accepting a flat rate of 40% on income and gains.
  • The possibility of payment by instalments if you have trouble paying in full.


The completion of the forms and the underlying computations can be laborious, but the April 1999 cut-off date is a wonderful provision (particularly since so many offshore institutions do not retain old records). The attitude of HMRC, particularly their willingness to discuss problem areas and to compromise where necessary, is refreshing (although it has taken some getting used to for those accustomed to a rather more confrontational approach). Clients are clearly benefiting – not just in terms of peace of mind and a clean slate going forward, but from the agreement of tax liabilities considerably lower than they might otherwise have been (savings of up to 75% are quite possible).

The LDF has in practice proved so attractive that HMRC have had to take steps to prevent what they see as abuse. The benefits of the LDF are now restricted where:

  • HMRC are already aware of the liabilities being settled; or
  • the issue being disclosed is already the subject of a Revenue enquiry or investigation that has been running for more than three months; or
  • there is no substantial connection between the liabilities being disclosed and the offshore asset held at 1 September 2009.

Even in these cases, however, the immunity from prosecution is still offered and for many tax payers the 'full deal' will still be available.


Typical scenarios that we have seen, include:

  • Funds retained abroad, either in their own names or via a trust or foundation, by those who have come to this country and gone on to acquire UK residence and domicile (the concern usually being with unpaid income and capital gains tax).
  • Savings that UK residents have transferred overseas, again held either in the names of the individuals concerned or a trust or foundation (again unpaid income and capital gains tax).
  • Income of a UK individual or company that has been diverted offshore without ever being declared (unpaid income or corporation tax on the original receipt and possible unpaid National Insurance and VAT as well, plus income and capital gains tax in respect of subsequent movements).
  • Proceeds from the sale of an asset, either in the UK or offshore, that have been placed in an offshore account without being declared (capital gains tax on the original disposal plus income and capital gains tax in respect of subsequent movements).
  • Funds as above that have been inherited by the next generation but remain undeclared (unpaid Inheritance Tax on top of everything else).

In a number of cases we have been contacted by family members on behalf of elderly relatives. We are happy to give initial advice on that basis, although ultimately it is the person with the tax liability (or their properly appointed attorney) who must make the disclosure.


Once you are sure that a liability exists and that the LDF is the right approach for you, the starting point in most cases is to transfer sufficient funds to a Liechtenstein financial institution for a 'meaningful relationship' to be established. We can guide you through these requirements. You can then register for the LDF and proceed with gathering together the relevant information and completing the disclosure forms.

Although it is in theory possible to submit a disclosure personally, completion of the forms is generally the last stage of a complex and time-consuming computational exercise. More importantly, when the forms are submitted they will be risk-assessed by HMRC before they decide whether to enquire further into your financial affairs. Significant elements in that risk-assessment will be the content of any accompanying report and whether the forms have been prepared by an adviser in whom HMRC already has confidence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.