Major changes to the terms of Liechtenstein Disclosure Facility (LDF)


On 14 August 2014 HMRC issued the Fourth Joint Declaration by the Government of Liechtenstein and HMRC, issued in response to a review which looked at the circumstances when the favourable terms offered under the LDF should not be available.

What has changed?

Following the review of how the favourable terms should apply to LDF registrations, access to 'full favourable terms' has been restricted to ensure that the criteria reflect the purpose of the LDF. The 'full favourable terms' include the reduced penalties for underpaid liabilities, the reduced assessment period and the option to use a single composite rate/single charge rate (where applicable).

The circumstances where these restrictions apply fall into three broad categories:

1. Cases where the relevant person enters the LDF to settle liabilities HMRC is already aware of. HMRC has stated that they wish to encourage settlement of these liabilities but do not believe it is “within the spirit of the LDF” to offer the full favourable terms.

2. Cases where the issue being disclosed has already been subject to an intervention that began more than three months before the time of LDF registration. ‘Intervention’ can include formal enquiries opened under TMA 1970, Sch 18 FA 1998 and investigations that are underpinned by the ability to raise an assessment under s29 TMA 1970. The full favourable terms will only be allowed in relation to any issues that are not connected to an HMRC intervention.

3. Cases where there is no substantial connection between the liabilities being disclosed and the offshore asset held by the relevant person on 1 September 2009 (the qualifying asset). These recent changes mean that it is now a requirement for a 'substantial relationship' to exist between the liabilities being disclosed and the offshore asset held by the taxpayer on 1 September 2009. The substantial relationship test will assess whether 20% or more of the total liabilities being disclosed are connected to the qualifying asset.

Where a case falls into one of the three categories above they will only be able to benefit from the 'limited favourable terms', including immunity from criminal prosecution and a single point of contact for disclosures.

Who will this affect?

Any LDF registrations made after 14 August 2014 will be impacted by these changes. HMRC has confirmed that they will not reopen cases that were settled under the practice that previously applied.

How can Moore Stephens help?

Moore Stephens' Tax Investigations & Dispute team can help you understand the recent changes to the LDF and how they may impact you or your clients. If you would like to discuss the changes further please contact us for a confidential discussion.

Dominic Arnold   
020 7651 1638

Matthew Watkins  
020 7651 1623

24 hour tax investigations and disputes hotline on 0207 651 1400 or email


Dominic Arnold

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