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Liechtenstein Disclosure Facility Failing

Friday, March 19, 2010

Six months since its launch, the UK's Liechtenstein Disclosure Facility (LDF) can only have had limited success, as findings from international audit, accounting and business services firm BDO show limited participation.

The LDF emerged from an agreement between UK tax officials and Liechtenstein. Through the LDF, UK authorities aim to eliminate all UK tax evasion with a Liechtenstein connection by March 31, 2015, but BDO's survey indicates it is unlikely to fulfil its purpose.

A recent survey of High Net Worth Individuals (HNWIs) in the UK commissioned by BDO found that 19% of UK HNWIs hold funds or assets overseas and of these individuals only 51% had heard of the LDF in the six months since it was launched on September 1, 2009.

The research also found that of the 19% of those surveyed with funds or assets overseas, 18% held bank accounts or other investments in Liechtenstein itself. However just 10% of these individuals had already participated in the LDF with a further 30% planning to participate in the future. The primary reasons for this participation were Inheritance Tax (33%), business investment (33%) and personal investment (33%).

Fiona Fernie, Partner in the Tax Investigations team at BDO, commented:

“While we have registered many clients for the LDF with HMRC (HM Revenue and Customs), we were aware that at this stage in the programme there would be a large number of people with assets in Liechtenstein who were either not aware of, or did not intend to participate in, the LDF. We believe that this will change significantly once the Liechtenstein side of the agreement becomes law and financial intermediaries there are compelled to write to their UK resident clients to notify them of the agreement.”

In October 2009 it was revealed in the UK press that just 27 individuals had registered for the LDF but until December 1, 2009, it was only available to those with bank accounts in Liechtenstein. From December 1, 2009, anyone with any investments or assets in any other offshore location was also able to participate in the LDF if they move some or all of those investments into Liechtenstein. BDO’s survey found that even with this increased access to the benefits of the LDF, just 5% of the HNWIs that were questioned said that they would definitely be interested in participating in the LDF with a further 10% undecided.

Fernie continued:

“HMRC has said that it will not offer such favourable disclosure terms as the LDF again and we strongly believe that those who have either not heard of the LDF and its benefits or have dismissed them as not relevant should now give serious consideration to making a disclosure under the LDF. Anyone who rejects the carrot now could well face the stick later.”

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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