Volltext: The future importance of tax compliant clients

LDF and Swiss-UK Tax Agreement 
tion is that under the LDF persons who are wrongly identified or are tax compliant are able to demon- 
strate their situation by sending a certificate of tax compliancy to the FI, which then terminates the 
LDF process. Under the Swiss-UK tax agreement, such persons must instead choose voluntary disclo- 
sure. LDF is clearly superior in these cases, since it guarantees the confidentiality of wrongly identi- 
fied persons. 
Once a bank in the Swiss-UK tax agreement has identified the relevant persons and managed the entire 
disclosure or withholding process of the agreement, their only duty will be deducting the withholding 
tax from the relevant persons who opt for this solution. In the years that follow, Swiss paying agents 
must withhold taxes on earnings, dividends and gains according to the agreed tax rate and send this 
annually to the tax authority. New clients are only permitted if their assets are taxed and declared. 
For Liechtenstein FIs, the LDF does not stop after all current clients are guided through the LDF. Until 
2016, new UK clients will have to undergo the LDF process. This enables persons with untaxed in- 
come and capital gains outside Liechtenstein and the UK, under certain conditions, to use the LDF. 
This additional change to attract new clients is an advantage for the LDF. The sustainability of these 
new clients will become clear in the future.*’* 
Phil Berwick notes that some practitioners are not aware that clients with undeclared tax liabilities in 
the UK and with a structure or bank account in a third country may also be able to use the LDF after 
some restructuring. If the offshore structure or bank account does not have any connection to a UK 
company, the client can form relevant property in Liechtenstein by transferring the management of the 
structure or some bankable assets to Liechtenstein.*? This feature should have received more promo- 
tion in the UK, perhaps with articles and speeches financially supported by the Government of Liech- 
tenstein or the Bankers Association and the Association of Professional Trustees. 
4.5 Privacy 
Privacy is an important issue in the financial business. The LDF breaks the banking secrecy against 
HMRC and all available information pertaining to UK individuals is open for the disclosure.”° How- 
ever, the LDF does at least protect privacy, due to the prohibition of “naming and shaming”, which is 
sometimes practised by HMRC.*” HMRC is permitted to use the information they receive from a dis- 
closure for third party tax liabilities, and they will share information if they are obliged to after a for- 
^" Berwick, 2010, p. 45-47. 
#5 Berwick, 2010, p. 45. 
#76 Schaad, 2012, p. 71. 
^" Goekmen, 2012, p. 53. 


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