When it was originally launched in August 2009, the LDF was a unique disclosure facility offering terms allowing the beneficial settlement of long-standing tax issues, including undeclared offshore income and gains and IHT.

The LDF has been extended until 6 April 2016, partly to bring it into line with the disclosure facilities for Isle of Man, Guernsey and Jersey launched earlier this year. These facilities are not as beneficial as the LDF but are useful in the right situation. These three new facilities have been generated by an increasing movement towards transparency as a consequence of the USA's Foreign Territories Account Tax Compliance Act (FACTA), as well as the exchange of information between the UK and the Crown dependencies and Overseas Territories. Additionally, the G20 (in conjunction with the OECD) is pressing for a worldwide automatic exchange of information system which will mean that all but the very darkest corners of the world's financial centres will be passing financial details in respect of their clients back to the client's tax authority, namely HMRC in the UK.

As the net closes in on those with undeclared offshore tax matters, the LDF will assist many to achieve a successful solution.

But what of the LDF to date? HMRC has publicly targeted £3bn in revenue from the LDF. As at 31 July 2013 (HMRC's latest published figures) the LDF shows the following results: total registrations 5,068 of which 3,519 are settled. A total of £710m has been paid to HMRC, with £589m from the settled cases, the rest on account. The average case settlement is £170k – reflecting the beneficial terms which mitigate the liability significantly when compared to normal HMRC tax enquiries. Significantly, 2,028 of the settled cases have produced an average yield of less than £100k and only 6 cases have produced over £5m each. Based on these numbers, it seems that HMRC is expecting 13,000 new registrations or a substantial increase in the average yield per case.

The beneficial terms of the LDF allow the liability falling on a discloser to be substantially reduced by way of a reduced penalty (10% for all years 1999/00 to 2008/09 inclusive, 20% and 30% for later years), a reduction in the maximum number of years for which tax can be recovered (from 20 to 14 years) and unique tax rates by way of the Composite Rate Option which removes, in many cases, any exposure to IHT.

Anyone with a tax problem linked to overseas investments or businesses should speak to a tax specialist who can advise them on the opportunity afforded by the LDF.

Smith & Williamson LLP Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International.

We have taken great care to ensure the accuracy of this newsletter. However, the newsletter is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. © Smith & Williamson Holdings Limited 2013. code: NTD146 exp: 31/03/14