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Tax Regularizations
We help clients rectify their tax situations with various taxing authorities. We have particular expertise in working with both the U.S. IRS and the U.K. HMRC, however, we also regularly coordinate with counsel in other juridictions in connection with contemporaneous voluntary disclosures.
U.S. Tax Regularizations
We routinely counsel clients on assessing unreported U.S. income and transfer taxes and thereafter represent the client before the IRS in order to remedy the outstanding tax and reporting obligations. The voluntary disclosure process has seen increased activity over the past year. We represent clients throughout the entire process.
U.K. Tax Regularizations (Liechtenstein Disclosure Facility)
In March 2010, the British government announced outlined its plans to crack down further still on undeclared funds in offshore jurisdictions. Underpinning the strategy is a new penalty regime, intended to target in particular those jurisdictions which are judged to be complicit in the non-payment of taxes, with differential penalties applying to non-compliance in respect of the UK and countries which have automatic exchange of information with the UK, those countries which provide for exchange of information on request only and those which do not have an agreement to exchange tax information with the UK.
In 2009, the British government entered into a Memorandum of Understanding and Joint Declaration with the government of Liechtenstein which provides UK resident tax payers with the possibility to regularize their taxes on preferential terms. The Liechtenstein Disclosure Facility (LDF) presents a unique alternative to ordinary unprompted disclosure, in that UK tax payers making use of the facility benefit from preferential terms, including the possibility a “no-names” discussion with Her Majesty’s Revenue & Customs (HMRC), the application of a single, composite 40% tax rate for all taxes, a 10% penalty rate, a relatively lower look back period than would otherwise apply, no criminal prosecution and no inclusion on HMRC’s “name and shame” list of defaulting tax payers.
The LDF is not necessary or appropriate in all cases, for example some cases of innocent error or a recently deceased defaulting tax payer, and it is imperative that a thorough analysis is undertaken to ascertain each client’s tax position: the existence of offshore accounts does not automatically mean that there is unpaid tax, for example where the account holder is not U.K. domiciled and has never remitted funds to the U.K. Any U.K. tax payer can benefit from the LDF by establishing a meaningful link with Liechtenstein.
Making a voluntary disclosure is inevitably a difficult experience for a client. We understand this, and are conscious at each stage of the process of the particular individual’s needs. For a UK resident tax payer, we are firmly of the opinion that anyone with undeclared taxes should take advantage of the LDF, and there are concrete financial reasons to do this sooner rather than later.
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