The Liechtenstein Disclosure Facility

UK and Liechtenstein sign landmark 5-year tax disclosure agreement

The global trend towards international tax transparency gathered further momentum on 11 August 2009 following the surprising announcement that the Government of Liechtenstein and the UK tax authority ('HMRC') signed a Memorandum of Understanding relating to cooperation in tax matters. In the Memorandum of Understanding, Liechtenstein and HMRC agreed to the introduction of a 5-year 'taxpayer assistance and compliance program'. As part of the program, Liechtenstein financial intermediaries will be under a duty to identify clients who may have a liability to UK tax and, if a client cannot provide evidence of his or her compliance with UK tax, the financial intermediary will have to cease acting for the client. In return, HMRC has offered a special disclosure facility with reduced penalties ('LDF').