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HMRC and the Government of Liechtenstein Sign up Next Stage of Tax Agreement

The recently signed ‘Memorandum of Understanding’ comprises clarification on Liechtenstein's five-year taxpayer assistance and compliance program (TACP) in addition to the five-year special disclosure facility (LDF) by HMRC for persons wishing to regularise their UK tax affairs.

Last year, the Government of Liechtenstein and HMRC signed a Memorandum of Understanding Relating to Cooperation in Tax Matters (MOU). On the same date the parties to the MOU also signed a joint declaration (First Joint Declaration) concerning the MOU on various agreed matters.

This Second Joint Declaration further clarifies the MOU and supplements the First Joint Declaration on related matters that have been agreed by the parties. Any terms used in the Second Joint Declaration will have the meaning given to them in the MOU.

Clarifications included in this MOU relate to:-

  • Audit Procedure;
  • Review Procedure;
  • Approval of Retention Procedure;
  • Protection of Financial Intermediaries Complying with the MOU;
  • Relevant Property under the LDF;
  • Clarification on the Composite Rate Option under the LDF;
  • Clarification on the penalties under the LDF;
  • Further Steps Regarding the UK-Liechtenstein Tax Convention;
  • Rights and Duties After 31 March 2015

The terms of the MOU can be varied by agreement between the parties or terminated by either party. If and when appropriate, the parties may issue further clarifications regarding issues relating to the MOU in order to ensure the orderly running of the LDF and the TACP.

HMRC have also recently disclosed registration statistics for the LDF to 30 September 2010 which was launched on 1 September 2009. Those registering have chosen to make their voluntary disclosures in advance of the introduction of the Liechtenstein TACP. By 31 March 2010 there were 419 registrations. By 30 September 2010 there were 876 registrations.

HMRC has agreed to publish the number of LDF registrations as at 31 March and 30 September each year. They will also publish how much yield has been generated from the disclosures after the first full tax year of LDF operation and annually thereafter. The first publication of tax yield will be to 31 March 2011 and is planned to be available by 31 May 2011.

In this issue of tax.point on here, Andrew Walker writes on the Liechtenstein Disclosure Facility and recent developments in this area.