LDF and Swiss-UK Tax Agreement 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
2011 GBP 42,624,616 | -GBP 1,313,462 | GBP 120,000 GBP 36,000 
2012 GBP 48,748,062 | GBP 5,967,446 GBP 120,000 GBP 36,000 
The expected tax burden would be as follows: 
Table 9 Case 3 calculation 
Taxes Normal Taxation LDF LDF CRO 
IHT on death 40% GBP 1,800,000 
IHT 10 year charge | 696 GBP 108,000] 6% GBP 743,798 
Income & gains 39.3% GBP 6,264,212 
1992 - 1998 
Income & gains 39.3% GBP 3,893,704| 39.3% GBP 3,893,704| 40% GBP 3,968,106 
1999 - 2009 
Income & gains 2010 | 39.3% GBP 1,329,618| 39.3% GBP 1,329,618| 39.376. GBP 1,329,618 
Income & gains 2011 | 39.396 -GBP 454,304| 39.396 -GBP 454,304| 5096 -GBP 578,731 
Income & gains 2012 | 39.396 GBP 2,403,453| 39.3% GBP 2,403,453| 50% GBP 3,061,723 
Late payment 8.5% GBP 1,142,118] 8.5% GBP 609,660] 8.5% GBP 661,361 
interest rate 
Late payment interest | 5% GBP 225,000 
rate inheritance 
Penalty 1992 — 1999 | 50% GBP 3,132,106 
Penalty 1999 — 2009 | 50% GBP 1,946,852. 10% GBP 396,370| 10% GBP 396,811 
Penalty 2009 — 2012 | 50% GBP 1,639,383| 20% GBP 655,753| 20% GBP 762,522 
Total tax burden GBP 13,395,534 GBP 5,967,120 GBP 5,297,724 
Portion of assets 27.596 12.296 10.9% 
  
  
  
  
Due to the steady income stream from overseas sales and the rental income, as well as the good per- 
formance of the investment over the last twenty years,” Mr Baker faces a high tax burden.” Under 
normal disclosure, he has to the pay IHT and the ten year anniversary tax as well as income and capital 
gains since 1992. Furthermore, he should expect a penalty of 50% or more. In total, he would face a 
tax burden of GBP 13.4 million, which is 27.5% of his total assets. 
  
20 Annual return of approx. 6% p.a. 
?! Bor the calculation it is assumed that 55% are interest income, 25% are dividend income and 20% are capital 
gains on average over the years. He is taxed on the highest possible rate (additional rate). 
55 
 
        

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