The end of the LDF

We consider the closure of the Liechtenstein Disclosure Facility (LDF): ‘The end of the most innovative disclosure facility HMRC has and will ever launch.’

The article is an abridgement of the Taxation Magazine article on the LDF, The Final Countdown. This version is from the website.


In September 2009, HMRC announced the introduction of (primarily) an offshore tax disclosure facility called the Liechtenstein Disclosure Facility or LDF for short.

The disclosure facility is one part of an agreement signed between the UK and Liechtenstein governments which enable any persons with unreported liabilities connected with assets held overseas, to settle with HMRC on favourable terms, which include:

  • Immunity from prosecution for the tax offence;
  • A fixed 10% penalty for periods from 6 April 1999 to 5 April 2009;
  • Liabilities covering a reduced period from 6 April 1999;
  • Single point of contact for disclosures;
  • The ability to choose a single composite rate rather than calculate actual liabilities.

Whilst the facility was primarily designed to disclose unpaid taxes from overseas accounts, it was possible to disclose wholly domestic matters and still retain the favourable terms. In addition, even when an enquiry had been issued (not in the case of a Code of Practice 9 case) it was possible to “flip” the enquiry into the facility.

However, from August 2014 HMRC announced various restrictions to certain favourable terms to ensure that the spirit of the LDF was not being abused.

The circumstances of these restrictions fall into three broad categories:

  • Cases where the relevant person enters the LDF to settle liabilities HMRC is already aware of;
  • Cases where the issue being disclosed has already been subject to an intervention that began more than three months before the date of application;
  • 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 favourable terms that are not available to people who fall within any of the above three categories are those that can lead to a reduction in the amount paid to HMRC. These are known as the full favourable terms and are:

  • A fixed 10% penalty for the relevant period;
  • Liabilities covering a reduced period;
  • The ability to choose a single composite rate rather than calculate actual liabilities.

In a surprise announcement in the recent Budget it was confirmed that the LDF and the disclosure facilities for the Crown Dependences of Jersey, Guernsey and Isle of Man will close on 31 December 2015. It is to be replaced with a final disclosure facility which will commence from 1 January 2016 and will run to 2017 to coincide with the provision of tax information under the Inter-Governmental Agreements (IGAs) in 2016 and the Common Reporting Standard from 2017.

At present only limited details have been released about this new facility; these include the fact that there will be no immunity from prosecution and that the level of penalties will be at least 30%. Whilst not confirmed, it is likely that there will be no option to elect for the Composite Rate Option, which is one of the LDF’s most favourable benefits in order to extinguish IHT liabilities.

Whilst there is a little under 6 months to the end of the LDF, if individuals do have unpaid taxes connected with overseas accounts or structures who haven’t come forward yet, then they really do need to register for the LDF to take advantage of the beneficial terms, which will not be available come 1 January 2016.

Please contact Doug Sinclair, Partner and Head of Tax Investigations, to discuss how the LDF can work for you.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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