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August 19, 2014

HMRC Announce New LDF Restrictions for EBT Users

Liechtenstein Disclosure Facility

HMRC have announced that the terms of the Liechtenstein Disclosure Facility (LDF) have been amended so as to restrict the availability of the full favourable terms in certain cases.

The changes are targeted at users of Employee Benefit Trusts (EBTs) (but could also affect other taxpayers) who have increasingly sought to make disclosures under the LDF owing in part to the favourable terms which reduce the amount payable in connection with the disclosure.

Under the new rules, the full favourable terms of the LDF will be restricted where:

- No disclosure of new information has been made,

- The issue being disclosed is already subject to an intervention that began more than 3 months before the application to enter the LDF, and

- There is no substantial connection between the liabilities being disclosed and the offshore asset held by the taxpayer on 1 September 2009.

The favourable terms which will be restricted are broadly those that may act to reduce a taxpayers total liability under the LDF (i.e. reduced penalties, limited disclosure period to 1999/00 and the composite rate option).

However, the LDF may still be of interest to taxpayers within these categories because although the full favourable terms will not be available, the assurance of no criminal prosecution will still apply.

The closing date for disclosures under the LDF is 5 April 2016.

EBT Settlement Offer

HMRC have also announced that the EBT Settlement Offer which allowed users of EBTs to settle their cases on favourable terms without litigation will be withdrawn from 31 March 2015.

EBT users will therefore need to act quickly to decide how best to disclose/settle historical tax liabilities connected with EBTs.




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