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A Tax Inspector Calls…. What to Do About your Undeclared Overseas Assets
By Christopher J Sherliker

The world is becoming a smaller place and no more so than in the tax world. With Swiss banks 'voluntarily' disclosing information and bank data 'going missing', tax authorities, whether in the UK or elsewhere, are having a field day! Jonathan Silverman explains why now is the time to face up to dealing with undeclared assets overseas for peace of mind and to ensure you don’t leave your heirs in a non-tax compliant situation with unresolved issues.

December 2009 saw the door close on the widely publicised voluntary disclosure amnesty made available by HMRC, but, as we shall see, all is not lost …and there are even opportunities to discuss cases anonymously with HMRC.

Whilst the days of keeping funds abroad out of the clutches of the UK taxman are long gone, not everyone has yet recognised that ‘the party is over’. It appears that a significant number of UK taxpayers did not take advantage of the HMRC amnesty, and are now either too apprehensive to address the issue or simply believe that they are minnows and will slip through the net – yet nothing could be further from the truth. HMRC is currently analysing the data it demanded from some 3,500 institutions last August … the clock is ticking.

Yet, as we said, all is not lost for those who wish to become tax compliant and seek protection against future prosecution for them and their successors.

The one, somewhat unexpected, avenue that remains available for UK taxpayers to become tax compliant – and which applies wherever the overseas assets are held – is to take advantage of a deal recently struck between the UK and Liechtenstein authorities, known as the Liechtenstein Disclosure Facility (LDF). Disclosure via a Liechtenstein financial intermediary, if properly handled, will result in HMRC undertaking to:

  • Limit any penalty to10 percent of the tax payable
  • Not look back further than 10 years
  • Give immunity against prosecution

This offer really is too good to ignore for anyone with undisclosed overseas assets who wants peace of mind for themselves and their family. We suspect this has only been agreed to by HMRC because it recognises the deal will lead to a significant tax take: crucial at a time when HMRC is desperate for funds.

Of course, the disclosure has to be handled properly and must be complete and full. HMRC has indicated that this really is the last chance to disclose voluntarily, so if you know anyone would like to discuss their options, we will be pleased to meet them and, where appropriate, introduce them to one of the recognised Liechtenstein financial intermediaries with whom we work. The fees involved are not significant, yet the savings in potential penalties are considerable. Moreover, there is no need to repatriate funds and we are looking at enabling clients to quite legitimately take advantage of overseas trust structures to protect their assets in the future.

Please be assured that notwithstanding our compliance obligations in this specific case, we are able to discuss matters with clients in the strictest of confidence.

Added: 1st September 2010

Christopher J Sherliker is a partner for Silverman Sherliker LLP who provide legal solutions across a spectrum of requirements.  Find out more about Silverman Sherliker LLP.

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