Government restricts Liechtenstein route for tax disclosure

A joint decision between HMRC and the Government of Liechtenstein has resulted in a change to the Liechtenstein Disclosure Facility (LDF)1, a vehicle through which those with undisclosed tax liabilities may reach settlement with HMRC on pre-defined terms. HMRC believe that the facility has been increasingly abused by employers who have used Employee Benefit Trusts (EBT)2 as a means of avoiding tax and who are now attempting to settle their tax affairs under the favourable conditions of the LDF. The new agreement will now result in restricted access to some of the favourable terms offered by the facility. 

Gary Ashford, who represents the CIOT on HMRC’s Compliance Reform Forum, commented:

“The LDF provided opportunities for some employers to settle tax liabilities in a way that was not intended.  These new restrictions will now ensure a more level playing field. The LDF is primarily focused on those with overseas tax liabilities, mainly those with undeclared assets.

“These changes now mean that taxpayers who reported under the Disclosure of Tax Avoidance Scheme (DOTAS) rules, or any situations where HMRC have been making enquiries for more than three months, will be unable to take advantage of the LDF. This means that users of many UK tax avoidance schemes who wish to settle their tax affairs will not be able to use this route.

“Ultimately, this is a statement of intent by HMRC to let people know that the LDF is available but there is a necessary tightening up of who is entitled to its provisions. As we wait to hear from HMRC about their next steps on accelerated payment notices and follower notices, we see the Revenue setting out a new, tougher approach to avoidance.”

Notes for editors

1.       A disclosure facility is a vehicle by which individuals with assets or investments held in overseas jurisdictions, and not declared for tax, are able to bring their tax affairs up to date. Further information can be found here. The LDF was launched in 2009 with the aim of allowing those with undisclosed tax liabilities and investments or assets in Liechtenstein to come forward and settle their liabilities with the Revenue.

2.       Settlement opportunities for EBTs are due to close in March 2015.
3.       The Chartered Institute of Taxation

The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries.  The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.


The CIOT’s 17,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.