Volltext: The future importance of tax compliant clients

LDF and Swiss-UK Tax Agreement 
  
Late payment interest | 9% GBP 94,747 
rate Inheritance 
  
Penalty 1992 - 1998 50% GBP 192,940 
  
  
  
  
  
Penalty 1999 - 2009 50% GBP 53,115 | 10% GBP 10°623 | 10% GBP 10,623 
Penalty 2010 - 2012 50% GBP 59,187 | 20% GBP 23°675 | 20% GBP 31,318 
Total tax GBP 1,855,668 GBP 415,299 GBP 327,102 
Tax in relation to 64.8% 14.5% 11.4% 
total assets 
  
  
  
  
Under normal taxation, Mr Thomson would have to pay 40% inheritance tax (IHT) on the assets his 
father passes to him (GBP 1,052,745) less the GBP 71,000 tax exempt amount.” In 1990, the transfer 
of the assets into the trust triggered taxes of 20%. This tax is known as IHT on transfer to trusts and 
the tax rate depends on the type, value, timing and the beneficiary of the trust.’'® The rule primarily 
applies to trusts, but since HMRC generally treats foundations as trusts, this tax also applies to Mr 
Thomson’s transfer." In addition to the IHT, the foundation has to pay 6% for a 10 year-anniversary 
tax on the asset value in 2000 and 6% on the distribution to the beneficiary.” 
Finally, Mr Thomson would have to pay income tax on interest and gains of the last 20 years?? of 
4096.? This all adds up to a payable tax due of GBP 1,855,668, including penalties of 5096." ^The 
penalties could be lower or rather higher depending at the discretion of HMRC." 
Assuming that the board of the foundation opens a bank account in Liechtenstein, transfers the re- 
quired 20% of the total assets to the account and the bank issues a certificate of relevance, Mr Thom- 
son could benefit from the LDF. Under this disclosure facility, only the occurrences since 1999 would 
be relevant?" Therefore, he would not be forced to pay the IHT on his father's death. Only the 10 year 
anniversary tax on the asset value in 2000 and 6% on the distribution to the beneficiary would matter. 
  
30° HMRC, 2013 (4). 
?*? HMRC, 2013 (5). 
31 Voisin law, 2009. 
?? Ernst & Young, 2012, p. 241 & 242. 
?? Barry & Airey, 2012, p. 13. 
?^ HMRC, 2013 (2). 
*15 For the calculation it is assumed that 5596 are interest income, 25% are dividend income and 20% are capital 
gains on average. 
?'$ HMRC, 2012 (6), p. 1 & 2. 
?" Barry & Airey, 2012, p. 13. 
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